If you have considered incorporating charitable giving into your estate plan, the McPherson County Community Foundation offers many options. We’re here to help you determine what your goals are, achieve tax advantages and establish your legacy.
Bequests
A bequest, made through a will or living trust, is a popular, flexible way to support your charitable interests through the McPherson County Community Foundation. A bequest to create an endowment or add to an existing fund can be done by designating a specific amount, a percentage of your estate, or what remains after all other bequests are fulfilled. Benefits can include significant state tax savings. (Please see our Sample Bequest Language.)
To maximize flexibility, the McPherson County Community Foundation accepts Letter of Intent during your lifetime. This strategy allows for changes to be made in relation to your charitable goals, marital status and more at any point in your lifetime at no charge.
Charitable Remainder Trusts
A donor may transfer assets to a charitable remainder trust that provides a specified distribution percentage to one or more (income) beneficiaries for life, or a term of years, with the remainder interest paid to charity. There are two kinds of CRTs:
- Charitable remainder unitrust. A CRUT requires annual revaluation of the trust assets — which typically changes the value of the unitrust payment — and allows donors to make additional gifts to the trust.
- Charitable remainder annuity trust. A CRAT does not allow donors to make additional gifts to the trust, and CRAT assets are not revalued annually, so the income beneficiary receives the original cash amount.
Charitable Lead Trusts
A donor may transfer assets to a charitable lead trust. A charity is the income or “lead” beneficiary for a lifetime or term of years, after which the remaining assets are distributed to the donor or other beneficiaries.
Gift Annuities
A charitable gift annuity is a contract between a charity and donor. In return for a donation of cash or other assets, the charity agrees to pay donor and/or someone designated by donor a fixed payment for life. The donor can claim an immediate charitable tax deduction for the amount of transfer above the value of the annuity purchase. If a donor funds a gift annuity with long-term capital gain property — e.g., with appreciated stock — the donor will report only some of the gain, and may be able to report it in installments over many years. Donors may establish a deferred charitable gift annuity and defer receiving income from the gift annuity for a period of years.
MCCF will consider issuing gift annuity contracts for annuities originating in McPherson County that meet these guidelines:
- The American Council on Gift Annuities published rates are used as a recommendation for the fund.
- Minimum gift amount is $20,000.
Life Insurance/IRA Beneficiaries
In larger estates, retirement fund assets distributed to family members may be subject to double taxation, first through the donor’s estate tax, and then through the beneficiaries’ income tax. IRA accounts listing MCCF as the beneficiary are free of estate and income taxes. Not only can MCCF be named as the beneficiary of a life insurance policy, but a donor can also transfer the policy irrevocably to the Foundation and claim an income tax deduction for the policy’s cost basis or cash surrender value (whichever is less). Any subsequent premium payments will be tax-deductible.
Beneficiary
It is also possible to name the McPherson County Community Foundation as a beneficiary of all or part of a financial arrangement, including retirement plans, IRAs or life insurance policies.
There are several advantages to this route:
- The policies are easy to create and modify
- You retain control of your assets during your lifetime
- Gifts are tax-exempt
- 100% of your gift is put to work precisely as you direct it
