Planned Giving & Estate Planning

Planned gifts are those that take place at some date in the future, over a period of time, or that allow the donor to retain an interest in the donated property. There are several types of planned gifts, both simple and complicated, that are ideal ways for a donor to continue to use property currently and to benefit HSWA in the future. In this series are very brief summaries of some widely-used planned giving vehicles.

BEQUESTS

The simplest planned gift is a bequest to HSWA in your will, which can be in the form of cash, securities, real estate or other types of property. The bequest can be for a specific amount or for a percentage of the estate, and can be either unrestricted or in support of a specific program or service. The language that creates a bequest in your will can be as simple as I give and bequeath the sum of $____ to Humane Society Waterville Area, to be used as determined by its Board of Directors.

GIFTS OF LIFE INSURANCE

You may designate HSWA as the sole beneficiary, or one of several beneficiaries, of a life insurance policy. Paid-up policies are the most effective gifts, in that neither the donor nor HSWA has any responsibility for making future premium payments.

RETIREMENT PLAN ASSETS

HSWA can also be named the beneficiary of most pension, profit sharing, 401(k), IRA and other retirement plan accounts. The complicated rules covering retirement plan distributions make it imperative that you consult with your plan administrator, your attorney and tax advisor before designating a charitable beneficiary for retirement plan assets.

CHARITABLE REMAINDER TRUSTS

There are two types of trusts that can be created to benefit HSWA: the charitable remainder unitrust and the charitable remainder annuity trust, both of which make payments to the donor (or someone else named by the donor) for a period of years or for the beneficiary’s lifetime. At the end of the specified period or the beneficiary’s life, the funds remaining in the trust are paid to HSWA. The amount of the payments to the beneficiaries is determined by a percentage expressed in the trust agreement. The major difference between the unitrust and the annuity trust is that the unitrust is revalued each year to determine the annual payout, and the annuity trust is valued once at its inception to determine the payments, which remain constant over the term of the trust. Both of these trusts are established through trust agreements created by your attorney, who will work with you to decide which type is appropriate for your situation.

CHARITABLE LEAD TRUSTS

These trusts provide the charitable beneficiary with immediate income for a specific period, after which the trust reverts to the donor or to another non-charitable beneficiary; HSWA will not receive the trust principal. These trusts may be effective for donors who have high current income but who will need income from the trust’s assets at some time in the future, such as after retirement or when other sources of cash flow are no longer available.

CHARITABLE GIFT ANNUITIES

A charitable gift annuity is a contract that pays the donor or the donor’s designated beneficiary a fixed periodic amount for life. The donor contributes a sum of money to fund the annuity, and the payments are based on the age of the recipient. A portion of each payment is income and the remainder is a return of the principal contributed, so only a portion of the payment is taxable to the recipient. The donor’s income tax charitable deduction is based on the life expectancy of the recipient. HSWA may be able to offer charitable gift annuities in the near future.

GIFTS OF RETAINED LIFE INTEREST

Often a donor wishes to donate real estate to a charity, but wishes to continue living on the property, or, in the case of income property, to continue to receive rent payments. In this case, the donor would transfer the property to HSWA subject to a retained life estate, and the donor would receive a charitable deduction determined by the donor’s (or other beneficiary’s) life expectancy. Other gifts can be subject to retained life estates, as well, such as artwork, collectibles or the income rights to a trust; each type of gift is subject to specific income tax deduction rules.

Planned gifts can be beneficial to both the donor and the charitable recipient. Because of the complexity of many types of planned giving vehicles, we strongly recommend that you consult your attorney and financial advisors before entering into any planned giving arrangement. We at HSWA would be pleased to discuss planned giving with you in greater detail and to work with you and your advisors to establish a plan that works for you and your family and that would also help our animals in the future.

Humane Society Waterville Area (HSWA) is a 501(c)3 non-profit charitable organization.