10 Planned Giving Terms You Ought to Know

Planned Giving.

If you have an estate plan or have considered estate planning, you may want to think about what kind of legacy you’d like to leave through planned giving. Your estate planning attorney can help you achieve your long-term goals. Not only can you support the charitable organizations that matter most to you, but you can take care of your family at the same time.

While it’s important to discuss and ensure that your wishes are carried out upon your death, it’s also important to understand the technical side of planned giving. Here’s a list of terms you ought to know.

These Are the 10 Planned Giving Terms You Should Know 

Planned Giving

Formerly known as “deferred giving,” planned giving refers to the charitable gifts you’d like to make during your life and upon your death. Planned giving includes real estate, charitable gift annuities, closely held stock, life insurance, charitable remainder trusts, non-cash assets, and more.

Planned Gift or Bequest Intention

Do you intend to leave a future gift to one or more charitable organizations? You may inform your attorney of your “intent” to do so. However, it will not be binding or legal because you’re simply stating your desire to leave a future gift.

Planned Gift or Bequest Notification

Your estate representative will make an official notification when your gift has come to fulfillment. It may be a percentage of your estate or some other gift. However, if the amount can’t be determined straight away, a gift expectation value may be used where appropriate.

Charitable Bequest

A charitable bequest is a stipulation in your estate plan, trust, or will that will allocate a gift to a specific nonprofit organization. Common gifts include cash, real property (homes and personal property), and securities.

Charitable Lead Trust

This is similar to a charitable remainder trust. However, the annual payments are given to a charitable organization. At the end of the trust’s term, the principle returns to you, the donor, or to the named beneficiaries. If it goes back to you, you can get a charitable income tax deduction. If the principle reverts to your beneficiaries, they’ll get the charitable gift tax deduction.

Charitable Remainder Trust            

It’s an irrevocable trust that pays a stated annual amount to one or more people for a specified period of time (usually the life of the individual). When the term ends, the remaining assets are distributed according to your wishes.

Contingent Bequest

It’s a planned gift that takes effect if your beneficiary or beneficiaries pre-decease you. For example, your estate plan, trust, or will may include verbiage such as, “If neither my partner or spouse or descendants survive me, I bestow, and devise [all or a percentage of] the remainder of personal and real property, wherever located, which I may own or am entitled to at my death, to [designated nonprofit organization].”

Life-Income Gifts

A general term used to describe charitable gifts that provide an income to you, the donor, or your specified beneficiaries. Life-income gifts may include charitable gift annuities, charitable lead trusts, charitable remainder trusts, and more.

Non-Probate Transfer Vehicles

Non-probate transfers include checking and savings accounts, money markets, and other investment funds, such as life insurance policies and retirement funds.

Retained Life Estate

You may choose to transfer ownership of your home to a particular charitable organization while retaining the right to live in the property. The benefit is that you can receive an income tax deduction in the year of the gift. However, it’s based on your age and property value.

Planned Giving Offers Many Benefits

 If you have an estate plan, you may consider discussing planned giving with your attorney. Why? Because it offers you and your beneficiaries many benefits. For example, during your life and upon your death, you’ll have a chance to make a difference by giving to nonprofit organizations that are dear to your heart. You and your beneficiaries will also receive tax advantages. Lastly, you’ll have the option of receiving an income from your gift.

Keep in mind that planned gifts are some of the largest you’ll ever make. It’s important to carefully consider how much you want to bequeath and to whom. The decisions you make today can greatly impact the institutions and people you choose to support.