Types of Legacy Gifts
Creating an LGBT Legacy of Excellence
Organizations like the Jon Sims Endowment Fund for the Performing Arts (JSEF) typically derive a significant portion of their annual and endowment income from realized bequests and other types of deferred gifts. Donors who choose to remember the (JSEF) in their estate plans provide critical funding to establish asset growth and the ability to provide grants to deserving entities. There are many creative ways to establish a planned gift for the JSEF.
Bequests and Living Trusts
The most common method of deferred charitable giving is that of a bequest through one’s will. This can be in the form of property, a specific dollar amount, a percentage of the remainder value, or a contingency on survivorship of a spouse or other beneficiary. The sample language below illustrates how a bequest or a gift through a living trust can be accomplished, and is intended to be used for educational purposes only rather than as specific investment advice.
This gives a specific item or specific piece of property to the JSEF. Such bequests are fulfilled first, before cash and residuary bequests.
I give ________________ (describe the asset) to the Jon Sims Endowment Fund for the Performing Arts, a 501c3 non-profit corporation, located in San Francisco, CA, to further the objectives and purposes of the JSEF.
A cash bequest provides a specified sum of money from a donor’s estate. These bequests are fulfilled second, after specific and before residuary bequests.
I give _____ Dollars ($_____) to the Jon Sims Endowment Fund for the Performing Arts, a 501c3 non-profit corporation, located in San Francisco, CA, to further the objectives and purposes of the JSEF.
A residuary bequest is made from the residue, or what remains in a donor’s estate after specific and cash bequests, taxes, settlement costs, and debts are satisfied.
I give the residue (or _____ percent of the residue) of my estate to the Jon Sims Endowment Fund for the Performing Arts, a 501c3 non-profit corporation, located in San Francisco, CA, to further the objectives and purposes of the JSEF.
Charitable Gift Annuity
This is an attractive, income-generating gift often considered by donors as a charitable gift annuity. It is a contract between you and the Jon Sims Endowment Fund for the Performing Arts whereby the JSEF agrees to pay a fixed annuity to a maximum of two beneficiaries (immediate or deferred) in exchange for the irrevocable transfer of assets by you to the JSEF. A portion of the annuity payment may be tax-free, and an income tax deduction may be allowed for the difference between the value of the gift and the present value of the annuity. The remainder amount is then available to the JSEF as initially described by the donor.
Deferred Gift Annuity
Similar to a Charitable Gift Annuity in that a donor makes a gift now and receives an immediate income tax deduction, however, in the case of a Deferred Gift Annuity the donor will begin receiving the annuity payments at a future pre-determined date. Due to the compounding of the gift’s income, the amount of the annuity payments can be significantly greater than the annuity payments under the Charitable Gift Annuity. In both cases, financial support of the JSEF is the eventual outcome.
An estate note is an irrevocable pledge that is legally binding against the donor’s estate.
Individual Retirement Account/Other Pension Plan – A donor may designate the Jon Sims Endowment Fund for the Performing Arts as the specific or contingent beneficiary of an IRA. At the death of the donor, all or a portion of the unused funds in the account pass to the Foundation and, as such, will be exempt from any applicable federal estate taxes.
Charitable Bequests of Pension, Keogh and IRA Death Benefits – Because death benefits payable to an individual beneficiary of a qualified retirement plan may have income tax as well as estate tax consequences, it often is best to name the Jon Sims Endowment Fund for the Performing Arts as the beneficiary.
The Jon Sims Endowment Fund for the Performing Arts may be designated as the owner and beneficiary of a life insurance policy. Subsequent premium payments made by the donor are tax deductible.
Retained Life Estate
Donors may wish to gift their home, or farmland, and retain a “lifetime interest” so they can live there after ownership has been transferred to the Jon Sims Endowment Fund for the Performing Arts. An income tax deduction based on the property’s current market value and the life expectancy of the donor is allowed. However, while living on the property the donor is responsible for real estate taxes, maintenance, and improvements.
Charitable Remainder Trust
Cash and marketable securities may be placed into what is called a charitable remainder trust. When the trust is created, the donor determines either a fixed percentage of assets payout (called a unitrust) or a fixed dollar amount payout (called an annuity). When the trust matures either at the death of the donor or the last beneficiary or at the end of a specified term, the Jon Sims Endowment Fund for the Performing Arts receives the remainder, which then would be used to support the LGBT performing arts.
Testamentary Transfers to Charitable Trusts
The Internal Revenue Service has approved the transfer of qualified plan assets to charitable remainder trusts. The beneficiary may begin withdrawal from the trust immediately, and if the beneficiary is other than a spouse, there would be significant estate tax savings. There also would be no immediate income tax on a charitable remainder trust funded with assets from a retirement account.
The members of the JSEF Board stand ready to provide limited advice and assistance to those wishing to support the LGBT performing arts through a future gift.
For more information about establishing a planned gift with the Jon Sims Endowment Fund for the Performing Arts, please write to email@example.com