Planned Giving Options
Last Updated 4/27/2011 3:04:36 PM
VHC Estate Planning
Different Planned Giving Vehicles for Different Circumstances
The simplest ways to support VHC are, of course, an outright donation of cash, or a gift of appreciated stock, which has the advantage of avoiding the capital gains taxes that you would owe if you sold the stock and donated proceeds of the sale.
But there are also a variety of planned giving vehicles that offer different ways to support VHC. Different planned giving vehicles offer donors different advantages, including, perhaps, avoiding taxes, providing increased annual income, deferring some income to the future, or helping VHC now and providing for loved ones down the road.
A summary of possible planned giving approaches and their advantages.
- Retirement Plan Beneficiary: Perhaps the easiest way to make a planned gift is to name VHC as a beneficiary of your IRA, 401(k), 403(b) or other retirement plan for a certain fraction of the remainder. Simply get a change of beneficiary form from your plan provider (or its website) and make the change! There’s no need for a lawyer, it’s easy and revocable, and there’s no income tax on the distribution that comes ultimately to VHC. VHC’s tax-exempt ID number is 51-0187809, which may be required on the form.
- Bequest: Including VHC in your will or estate plan is as simple as inserting this language in your will: “I give________ [specific dollar amount or percent of your estate] to the Vermont Humanities Council, having its principal offices at 11 Loomis Street, Montpelier, Vermont 05602, for its general purposes."
This option warrants greater consideration from many donors, including donors who want to provide in their will for their children or grandchildren: if you estimate the value of your estate and then think about the number of beneficiaries you want to provide for, you may very well conclude that a bequest to VHC can make an enormous difference to Vermont Humanities Council without significantly reducing the amount that each of your beneficiaries will eventually receive.
- Charitable Gift Annuity: VHC partners with the Vermont Community Foundation to offer charitable gift annuities. In exchange for your gift to the Vermont Community Foundation (which holds the annuity for the benefit of VHC), you and/or a loved one receives a fixed amount annually for the rest of your life. Part of this income is tax-free, and you receive an immediate charitable deduction, as determined by IRS tables. The rate paid by the annuity is determined by the age/s of the income beneficiary/ies. When the gift annuity ends, the remaining principal passes to a fund to benefit VHC. The Vermont Community Foundation is now offering attractive income rates on newly created gift annuities, which makes this a good time to create a charitable gift annuity.
Income beneficiaries must be at least 60 years old when the annuity is established, and the funding minimum is $15,000 for annual payments and $25,000 for quarterly payments. Charitable gift annuities are especially advantageous if you have appreciated stock that is producing only a modest return (a utility stock, for example). Using them to fund a charitable gift annuity avoids some of the capital gains taxes you would have had to pay if you sold the stock and re-invested the money in a higher-yield investment vehicle.
- Deferred Gift Annuity: In exchange for your gift to the Vermont Community Foundation for the benefit of VHC, you and/or a loved one receive fixed sum payments each year for life starting at some future date. Part of this income is tax-free, and you receive an immediate charitable deduction, as determined by IRS tables. A deferred gift annuity has the advantage of providing an immediate charitable income tax deduction (during, perhaps, your high income years) and then a guaranteed future fixed stream of income beginning some time in the future, perhaps during your retirement years. The longer you wait to receive income, the higher the rate of return you receive. When the annuity ends, the remaining principal passes to a fund to benefit VHC. For a Deferred Gift Annuity, the youngest beneficiary must be at least age 21. The funding minimum is $15,000 for annual payments and $25,000 for quarterly payments.
- Charitable Remainder Trust: Under our partnership with the Vermont Community Foundation, the Foundation is willing to serve as trustee of charitable trusts. Your trust pays you and/or a loved one a fixed annual sum or a fixed percentage of the trust’s value each year, either for life or for a term of years. The remaining assets then go to a fund that benefits VHC. Part of your gift qualifies for an immediate tax deduction, as determined by IRS tables. You could also serve as your own trustee, or use a different third-party trustee, such as a bank or trust company.
- Charitable Remainder Annuity Trust: Your trust pays a fixed dollar amount each year to you and/or a loved one for life, or for a term of years. When the annuity ends, the remaining principal passes to a fund to benefit VHC. Part of your gift qualifies for an immediate charitable deduction, as determined by IRS tables.
- Charitable Lead Trust: If you have assets producing income that you don’t now need but you’d like your children or grandchildren to inherit those assets, consider a Charitable Lead Trust. Income will be paid to VHC each year during the term of the trust, which can be for either a term of years or for the lifetime of one individual. At the end of that time period, the assets in the trust go back to you or your loved ones. A charitable lead trust is a great way to provide for children or grandchildren and help VHC now.
- Retained Life Estate: You deed your home or farm to VHC, but retain the right to live in it for the rest of your life, a term of years, or a combination of the two. (You could, of course, donate your house to VHC in your will, but you would not receive an income tax deduction, as you would if you made the gift during your lifetime.)
- Life Insurance: If you give VHC a Life Insurance policy, the cash surrender value of the policy or the cost of a replacement policy is deductible as a charitable contribution. If you continue to pay premiums after making your gift, the premiums are also tax-deductible.
These brief descriptions are not intended to be exhaustive, but merely to suggest some options that you might want to consider, given your circumstances. For more information or assistance, feel free to contact either Peter Gilbert by e-mail or phone 802.262.2626, ext. 300 or Tom Smith by e-mail or phone 802.388.3355. Tom is the Senior Philanthropic Advisor at the Vermont Community Foundation. He has graciously agreed to provide any counsel or assistance that might be helpful.