Charitable Planned
Giving Methods to Discuss with Your
Financial Advisor
Beneficiary Designations of Retirement
Plans and IRAs
Retirement accounts, which include pension
plans, profit sharing plans, stock bonus
plans, Keogh Plans, 401(K) plans and
Individual Retirement Accounts (IRAs),
generate a number of tax consequences at the
time of death of the owner. These tax
consequences make qualified retirement
assets and IRAs appropriate as charitable
giving vehicles.
Bequest or Devise is a gift
provided for in a person’s will.
Charitable Lead Trust, also known as
Short Term Charitable Trust or a
Reversionary Living Trust, is a trust
which is irrevocable for a term of years
with the income being paid to the charity
during this term. There is a provision for
the property to revert to the trustor at the
end of the term.
Charitable Remainder Annuity Trust is
a trust created by the Tax Reform Act of
1969 and it provides for a donor to transfer
property to a trustee subject to his right
to receive a fixed percentage of the initial
net fair market value of the property for as
long as he lives. Whatever remains in the
trust at this death becomes the property of
the beneficiary institution.
Charitable Remainder UniTrust is
another trust of the Tax Reform Act of 1969.
It is similar to the Charitable Reminder
Annuity Trust in many ways, except the
income is a percentage of the fair market
value of the property transferred,
determined annually.
Gift Annuity is a contract between
the Foundation and the client. By
transferring cash or other assets, such as
securities, the client will receive
guaranteed payments for life. The amount of
each payment is determined by the client’s
age when the annuity is initially funded.
Married couples often choose to have two
annuitants so both will enjoy payments for
life.
Gift of Life Insurance is designation
of a charitable organization as beneficiary
of an insurance policy; assignment of
ownership of a policy to charity; or gift to
charity of a partial interest in the party.
Life Estate Contract is a contract
that provides for a donor to transfer title
to his home or family farm to a charity,
reserving for himself the right to live in
and on the property and receive all the
income created by the property during his
life. At his death, the home or farm becomes
the property of the charitable organization.
Payable on Death Deposit Account is a
specific type of bank account allowed in
most states which is payable on request to
one person during lifetime and on his death
to tone or more P.O.D. payees, or to one or
more persons during their lifetimes and on
the death of all of them, to one or more
payees.
Qualified Terminable Interest Property
Trust is a product of the ERTA of 1981.
This trust must pay all income to the
surviving spouse for life and pass the
remaining trust principal to a designated
beneficiary (which may be a charity) at the
death of a surviving spouse.
Revocable Living Trust is a flexible
revocable agreement whereby a donor
transfers income-producing property, of
almost any kind, to a trustee and receives
an income for a period of years or for life
and whatever remains in the trust at his
death becomes the property of the
beneficiaries of the trust.
More information about making a planned gift
can be found at the website of Leave a
Legacy Arkansas at
www.leavealegacyarkansas.org
