Charitable Remainder Trusts
Provides Life Income and is Tax-Smart
Charitable Remainder Trusts
A charitable remainder trust (CRT) is a popular type of life-income plan. Cash, securities, real property, or other assets are transferred to a trust. The trustee manages the trust assets and pays you, or others you choose, a fixed income for life or for a term of years. When the trust terminates, the remaining assets in the trust are transferred to Ronald McDonald House Charities® of Metro St. Louis.
The typical donor:
●Desires income for life or a specified term of years ●Is between the ages of 55 and 80
Gift features and benefits:
●Income for life (fixed or variable payments depending upon the type of trust) ●May benefit multiple beneficiaries ●Assets transferred to the trust may be sold and reinvested without recognizing capital gains ●Ability to choose the trustee (may be the donor) ●Investment of assets is designed to balance income needs with preservation of principal
How do I make a gift using a Charitable Remainder Trust? A trust document tailored to your needs is drafted by your attorney. Your assets are transferred to the trust. The assets are invested to match the trust’s income objective. The designated beneficiary(ies) receive income for life or a specified period of years. At the death of the beneficiary, or the end of the period, the remaining assets are transferred to the charity designated in the trust.
Facts you should know about a Charitable Remainder Trust:
●The income tax deduction you receive from a charitable remainder trust is based on an Internal Revenue Service (IRS) formula that considers the ages of the donors and income beneficiaries, the payout of the trust, and an IRS index rate known as the Applicable Federal Rate (AFR). ●Generally, the shorter the trust term, due to the age of the beneficiary(ies) or the term of years chosen, the larger the income tax deduction. ●The trust is irrevocable.
If you are interested in learning more about Charitable Remainder Trusts or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63104 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com
Retirement Plans
Tax-Smart Gift: Avoids Double Taxation Like many Americans, you are probably aware that retirement plans can be the basis for a financially secure future. However, these same retirement dollars and deferred annuities can be seriously depleted by income and estate taxes after your lifetime. To satisfy your desire to leave a legacy, consider donating a portion of your retirement plan.
Potential benefits of using retirement accounts for charitable giving:
●A charity is generally not subject to income taxes, thus the double taxation (estate and income taxes) at your death is eliminated. ●The gift of your retirement assets would qualify for the estate tax-charitable deduction.
What options do I have in gifting my retirement plan?
●Through a deferred giving arrangement, you can have your retirement assets pay an income for life to a family member, after which the remaining assets pass to RMHC.
Limited Window to make a Tax-Free Lifetime Gift
The Pension Protection Act of 2006 permits persons over age 70 ½ to make gifts through 2009 of up to $100,00 per year from an IRA to a qualifying charity (such as Ronald McDonald House Charities of Metro St. Louis) without recognizing income. To avoid income tax, the transfer must pass directly from the IRA custodian to the charity rather than being withdrawn from the account and contributed to the charity. For donors who’s gifts are limited due to adjusted gross income limits, this is a great option.
●Upon death, your retirement plan account can pass directly to Ronald McDonald House Charities of Metro St. Louis as your primary beneficiary; OR
If you are interested in learning more about Retirement Plan Gifts or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63104 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com
Life Insurance Gift
Give the Gift of a Lifetime How does a life insurance gift work?
There are many people who desire to make a substantial donation to Ronald McDonald House Charities® of Metro St. Louis but do not have enough discretionary income. If you are one of those people, consider naming RMHC as a beneficiary of a new or existing life insurance policy. The policy can be fully paid or one which you are still making premium payments.
Who is the ideal life insurance policy donor?
Making this gift is simple.
Donor Benefits
Just contact your insurance agent about purchasing a policy or adding Ronald McDonald House Charities of Metro St. Louis as a beneficiary to a current policy. You can choose to list RMHC as the only beneficiary or to receive a percentage of the policy. (Example: Designate 25% of the policy to a spouse, 25% to a child and the other 50% to RMHC.)
●Younger donors who want to make a significant gift now but can’t afford the outright (cash) gift. ●Older donors who bought insurance when they were young but no longer need it. ●Anyone who has a paid-up policy he/she no longer needs.
●A life insurance policy can transform a small giver into a substantial donor. ●Future premium payments on a donated policy qualify as a charitable gift. ●Income tax deductions (for paid-up policies usually equal the replacement value of the policy. ●The satisfaction of giving a significant gift to RMHC without sacrificing income or security.
If you are interested in learning more about Life Insurance Gifts or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63104 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com
Life Estate Gifts Gift Your Home but Continue to Live There
Through a life estate contract you may gift a personal residence, including surrounding acreage, if desired, to Ronald McDonald House Charities® of Metro St. Louis and retain lifetime use of it for yourself, your spouse, a friend, or loved-one.
Life estate contracts allow you to:
●Retain the use of the residence (and any income) ●Realize an immediate charitable income tax deduction ●Realize an eventual estate tax savings Your income tax savings is based on the present value of the gift of the remainder interest to Ronald McDonald House Charities of Metro St. Louis. If you have already left property in your will or trust to RMHC or are considering such an arrangement, you may want to consider a life estate gift option to see if you can benefit from a current income tax deduction.
Here’s an Example:
Frank, Class of '53, owns a beautiful home in Lake Saint Louis worth $700,000, which he bought for $400,000. Frank wants to make a substantial gift to RMHC, but he wants to continue living in his home, which has a beautiful view of the water. Frank gives his home to RMHC but retains a life estate for himself. He has the satisfaction of knowing that he has made a major deferred gift to RMHC which will help many area families. He continues to live in the house until his death. Frank's estate then gains a large and immediate income tax deduction (over $360,000 based on our example) and removes the house from his estate, thus reducing future estate and inheritance taxes for his heirs.
If you are interested in learning more about Life Estate Gifts or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63104 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com
Gift Annuity: Pays Income for Life How does a gift annuity work?
A gift annuity is a simple contract between the donor and Ronald McDonald House Charities® of Metro St. Louis. In exchange for your cash, stock, or mutual fund gift, RMHC promises to make fixed lifetime payments to the donor. The payments are age dependent; the higher the donor’s age, the higher the income payments.
Who makes the ideal gift annuity donor?
● Donors who don’t want to sell their stock because of capital gains taxes but want to increase income. Appreciated stock held for at least one year is a good candidate for such a gift as the charitable deduction is based on the current value of the stock and the donor avoids or defers capital gains tax on the amount the stock has appreciated ● Donors interested in Pillars of the House Society membership
● Donors that want to make a lasting difference to the mission of Ronald McDonald House Charities of Metro St. Louis What You Should Know. ● Donors who can afford to make a gift but desire a ● The agreement is irrevocable fixed income payment ● The amount of the payment is dependent upon ● Donors who are 60 years or older the annuity rates in affect at the time of the gift, the age of the recipient and the amount of the gift
Gift Annuity Illustration Mr. Ronald McGiver: 6.7% Charitable Gift Annuity Assumption: Annuitant Amount Donated Cost Basis Annuity Rate Payment Schedule
May 2009 Ronald McGiver 75-years-old $20,000 cash $20,000 6.3% Quarterly
Benefits Benefits: Charitable Deduction Annuity to Donor* (Paid Quarterly)
$8,496.20 $1,260.00
*Depending on the type of asset you contribute, a portion of your payment may be taxable to you as a combination of ordinary income, long-term capital gain, and a tax-free return of principal. This report has been calculated assuming a contribution of cash. Each of your next 12.4 years payments of $1,260 will contain $926.73 of tax-free income and $332.27 of ordinary income. All income will be ordinary after 12.4 years.
If you are interested in learning more about Gift Annuities or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63104 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com
Wills/Bequests
Help Us Continue to Care for Our Families Well into the Future Did you know?
•Two-thirds of all Americans die without a will, often resulting in confusion and court entanglements.
What You Should Know Q. Why is a bequest a good planned gift option? A. Bequests allow you to make a gift without concerns about outliving your financial resources. There may also be a tax advantage such as unlimited estate tax charitable deductions. Most important, donors maintain control of their assets during their lifetime, but still make a difference in the future.
Q. What are the options for a planned gift through a bequest? A. Gifts can be a percentage of your estate, a specific dollar amount, a contingency amount depending on a circumstance that you have created, or a residual amount (what is remaining) of your estate. Q. What legal language should I use in my will to make a bequest? A.“I bequeath the sum of $___ (or ___% of the rest, residue and remainder of my estate; or shares of ___________) to Ronald McDonald House Charities of Metro St. Louis, Inc. whose legal address is 4381 West Pine Boulevard, Saint Louis, MO, 63108).
Already have a will? A Codicil is an easy and inexpensive way to add your wish of remembering Ronald McDonald House Charities®of Metro St. Louis to your existing will.
If you are interested in learning more about Wills, Bequests, or any other Planned Giving option, please contact Dan Harbaugh at 314.773.1100, ext. 1413.
Create a brighter tomorrow for Ronald McDonald House Charities® of Metro St. Louis families. Planned Giving is an umbrella term to describe a variety of estate planning techniques for making a gift to charity, including: bequests, gift annuities, life insurance policies, retirement plans and trusts, among others. The information in this publication is not intended as legal, tax, or investment advice. For such advice, please consult an attorney, tax professional, or investment professional.
Ronald McDonald House Charities® of Metro St. Louis 3450 Park Avenue Saint Louis, MO 63108 Phone: 314.773.1100 Fax: 314.773.2053 E-mail: info@rmhcstl.com www.rmhcstl.com