| Charitable Estate Planning |
| Our staff is available to discuss the various planned giving options and benefits, provide sample calculations and forms, or arrange for a confidential gift planning consultation with you. We also offer flexible tools for giving such as donor advised funds and scholarships. We've earned the trust of many financial advisors, and we welcome the opportunity to work with you. Through charitable giving, you have a unique opportunity to help your clients achieve their other financial, personal or business goals. In fact, by integrating philanthropy with overall financial, tax and estate planning, you can ensure that your clients are achieving their charitable goals while receiving the full benefit of their contributions. This information does not constitute legal or financial advice and should not be relied up as a substitute for professional advice. Bequests Charitable bequests can take a variety of forms — a percentage of the estate, a specific sum of money or asset, or a certain piece of property. Crossroads Community Foundation also can be named the "residuary beneficiary" of all or part of the estate after other bequests, or a "contingent beneficiary" in the event other named beneficiaries do not outlive the donor. Charitable QTIP Trusts A QTIP (qualified terminable interest property) trust with a charitable remainder can be created during life or by will. A charitable QTIP trust allows the donor to direct the income from the trust (and principal needed) to a surviving spouse for life. At the end of the trust's term, the remaining assets pass to a fund at Crossroads. If your client creates the trust to take effect at death for a surviving spouse, the trust completely escapes estate and gift tax because the portion passing to the spouse qualifies for the marital deduction, and the gift to Crossroads qualifies for a charitable deduction. The QTIP trust permits the trustee to distribute trust principal to the spouse, a feature that is not possible with a charitable remainder trust. Charitable Remainder Trust Charitable remainder trusts are flexible vehicles that allow the donor to make a charitable gift but retain an income stream for the donor and/or others for life or a fixed number of years (maximum 20 years). These trusts are particularly well suited for gifts of appreciated securities and other assets such as real estate producing little or no income at the time of the gift. Because the trust is tax-exempt, it can sell the original asset without incurring capital gains tax and reinvest for a higher yield. As a result, the income from the trust may be considerably larger than the net earnings from the original low-yielding assets. This gift planning strategy is best suited for gifts of $100,000 or more, and may be established during life or by will. There are two types of charitable remainder trust. A charitable remainder unitrust allows the donor to receive a fixed percentage (minimum 5%) of the trusts assets each year. Income payments will fluctuate as the value of the trust changes each year. A charitable remainder annuity trust allows the donor to receive a fixed dollar amount each year. Additional gifts may be made to a charitable remainder unitrust but not to a charitable remainder annuity trust. Benefits With a charitable remainder trust, your client will:
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| Case Study Dennis Werth, age 70, is retired and owns as part of his assets $100,000 worth of General Electric stock, which he purchased many years ago for $20,000. The stock yields a modest annual dividend of 1.5%. Dennis would like to increase retirement income for himself and his wife Jane (also age 70) by reinvesting in higher yielding securities, but if he sells the stock, he will be forced to pay a federal capital gains tax of $16,000. Instead, he establishes a charitable remainder unitrust with the help of his lawyer and Crossroads, naming himself and Jane as the income beneficiaries. Because the trust is tax-exempt, it can sell and reinvest the assets for a higher yield without having to pay a capital gains tax on the sale. The charitable remainder unitrust will pay Dennis and Jane 8% of the trust assets each year for the remainder of their lives. Their distributions increase immediately from $1,500 to $8,000 per year and will grow over time if the trust assets appreciate in value, but will always represent 8% of the trust value. Following the deaths of both Dennis and Jane, the remaining principal will be used to establish the Werth Family Fund, a permanent Donor Advised Fund at Crossroads of which family members are fund advisors. Summary of benefits |
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| Gifts of Retirement Plan Assets When retirement assets pass to heirs, these assets can be subject to both estate and income taxes, which can total more than 70% of the assets. Many donors are electing to avoid these taxes by designating Crossroads Community Foundation as the beneficiary of their retirement accounts and designating other assets (such as appreciated stock with a stepped-up cost basis) to their heirs. Gifts of Life Insurance Your client can make a gift to Crossroads by irrevocably designating Crossroads Community Foundation as the owner and beneficiary of a paid-up insurance policy. Your client will receive an income tax charitable deduction equal to the lesser of the "replacement" value or cost basis of the policy. |
