A Guide to Gift Planning at Montana FFA Foundation
WELCOME & TABLE OF CONTENTS By reading through the information provided in this guidebook, you are taking the first step in making a planned gift, which will provide for the long-term sustainability of FFA and the future of agricultural education. Whether you desire to structure your planned gift to provide funding where the need is greatest or to benefit specific programs or scholarships, we have opportunities to make your vision come to life. Montana FFA Foundation staff is available to assist you and your advisors in estate and gift planning.
Montana FFA Foundation
Jaime Edmundson, Executive Director 502 S. 19th Ave, Suite 102 Bozeman, MT 59718 406-582-4118 www.montanaffa.org If you have already included a gift to the Montana FFA Foundation in your plans, we ask that you provide a copy of your will or living trust – or only the section that specifically pertains to your bequest – to us at the address above. Your information will be used for long-term organizational planning and confidentially kept on file to guarantee your wishes are appropriately followed and your gift receives proper recognition. Thank you for your continued support and considerate interest for securing the future of FFA.
Gift of Insurance ......................................................................................................................................... 1 Bequest ............................................................................................................................................................. 2 Charitable Remainder Trust .............................................................................................................. 4 Charitable Gift Annuity ......................................................................................................................... 6 Gifts of Real Estate .................................................................................................................................. 8
GIFTS OF INSURANCE Life insurance gifts can be made easily and by almost anyone. These gifts can be structured to be made either during life or at the time of death.
NEED
SOLUTION
You have a life insurance policy which is no longer needed for its original purpose. There are a number of ways to put your policy to use to support FFA members.
Making an outright-gift of a life insurance policy is easy. Contact your insurance company and complete the proper change of ownership form, designating FFA as the new owner.
DONOR
BENEFITS
Gifts of life insurance are popular among people who have whole life insurance policies they no longer need.
Making a gift of life insurance can potentially qualify you for a current charitable income tax deduction. If the policy you donate has premium payments remaining, you can continue to pay them directly to FFA for additional deductions.
THE DETAILS In addition to an outright gift of insurance, a variety of giving plans are available to suit your needs.
Bequest of Insurance:
Insurance Unitrust:
You may wish to maintain ownership of your policy as a financial safety net. By designating FFA as the beneficiary of the policy, you can retain full control with FFA receiving the proceeds after your lifetime. The beneficiary designation is usually made by completing a simple form provided by your insurance company. The gift can be deducted for estate tax purposes but will not qualify you for an income tax deduction.
If you do not want to give your policy outright, but instead desire life income, another option is to transfer your policy to fund a charitable remainder unitrust (CRUT). The CRUT will provide you with a current income stream for your lifetime or for a term of years and potentially qualify you for a charitable income tax deduction in the year the trust is established. FFA benefits from the future remaining trust value. 1
BEQUEST A gift to the Montana FFA Foundation made through your will or trust, bequests are the simplest and most popular form of planned giving.
NEED
SOLUTION
You want to support FFA, but are unable to donate during your lifetime.
By designating FFA as a beneficiary in your will or trust, you can retain ownership and use of property during life and still benefit FFA and the future of agricultural education.
DONOR
BENEFITS
Bequests are common and can be made by anyone, at any age.
1. FFA: The property or cash is transferred to FFA when your estate is disbursed. 2. Tax Deduction: The amount given to FFA is not subject to federal estate tax. 3. Flexibility: You retain use and control of the property during life.
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THE DETAILS You can leave property to FFA by including a bequest in your will or trust. Property that passes through a beneficiary designation, such as an individual retirement account, can be left by designating FFA as a beneficiary.
Specific Bequest:
Percentage of Estate:
One way to give is by making a bequest of a fixed amount of money or a specific piece of property. Giving this way ensures that you know the precise property to be gifted or the exact amount of your gift.
Another way to give is by designating a percentage of your estate. By structuring your gift this way, you ensure that the amount of your gift self-adjusts to the size of your estate, with your gift typically being made after any specific provisions have been followed.
“ I give, devise, and bequeath to the Montana FFA Foundation, a not-for-profit organization located in Bozeman, Montana, the sum of $_____ in cash or in-kind (or _____ shares of _____ stock) to be used at the discretion of the Board of Directors of the Montana FFA Foundation for the general purposes of the Montana FFA Foundation and its related entities.”
“ I give, devise, and bequeath to the Montana FFA Foundation, a not-forprofit organization located in Bozeman, Montana, ____ percent (%) of the rest, residue, and remainder of my estate as an unrestricted gift to be used at the sole discretion of the Board of Directors of the Montana FFA Foundation for the general purposes of the Montana FFA Foundation and its related entities."
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CHARITABLE REMAINDER TRUST Once the trust instrument is drafted, cash or property is transferred to the trust. In accordance with the trust’s terms, the trust makes payments to one or more beneficiaries, either for the duration of your lifetime or a specified term of years, and then distributes the remainder to FFA.
NEED
SOLUTION
You own appreciated property that produces little or no income, which you want to turn into a productive asset, without paying capital gains tax on the sale of the property.
You transfer appreciated property, such as stocks or real estate, to a charitable remainder trust, which will sell the property tax free and make payments for your lifetime or a specified term of years.
DONOR
BENEFITS
Charitable Remainder Trusts are ideal for those with cash or appreciated property with a value of at least $100,000 who want to secure a stream of income while bypassing capital gains tax.
1. Bypass Capital Gains: The trust sells property tax free. 2. Increased Income: The trust pays a percentage of its value to the trust beneficiary. 3. Tax Deduction: You receive a current federal income tax deduction.
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THE DETAILS You transfer cash or appreciated property to the charitable remainder trust (CRT). The CRT is a tax-exempt trust that can sell the property without paying capital gains tax.
Duration:
Payout Flexibility:
A CRT can last for the lifetime of one or more beneficiaries or for a specified term of years.
A unitrust offers four flexible payout options:
Annuity vs. Unitrust Payout:
1. A standard CRUT pays a fixed percentage of the trust value.
A charitable remainder annuity trust (CRAT) pays a fixed dollar amount each year. A charitable remainder unitrust (CRUT), however, pays an amount equal to a percentage of the trust value at the beginning of each year.
2. A net income unitrust (NICRUT) pays the lesser of the trust’s net income or the standard amount. 3. A net income with makeup unitrust (NIMCRUT) operates like a NICRUT but can make up distributions.
Taxation of Payouts:
4. A flip CRUT pays like a NIMCRUT until a certain date or event, then “flips” to pay out like a standard unitrust.
Most CRT payouts are taxed to the beneficiary as ordinary income and/or capital gain.
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CHARITABLE GIFT ANNUITIES A charitable gift annuity (CGA) is a contractual agreement through which you make a gift of cash or property to Montana FFA in return for fixed payments for one or two individuals.
NEED
SOLUTION
You want to make a gift to FFA and receive a stream of fixed income for the future.
You and FFA enter into a charitable gift annuity agreement.
DONOR
BENEFITS
For anyone who desires fixed payments for life, a CGA is beneficial for those who have cash or appreciated property that may produce little or no income.
. Fixed Payments for Life: A stream of fixed payments to one or two individuals for life. . Tax-free Payments: A portion of each payment may be tax-free. . R ates by Age: Payout rates are based on the annuitant's age, with older annuitants typically receiving a higher payout. 4. Tax Deduction: You receive a federal income tax deduction by donating this way.
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THE DETAILS A charitable gift annuity is a contract between you and FFA. In exchange for your gift of cash or property, FFA will make fixed payments to you and/or another designated beneficiary for life.
Duration:
Taxation of Payouts:
You give cash or appreciated property to Montana FFA. In exchange, FFA makes fixed payments for life to you and/or another individual.
A predetermined portion of each gift annuity payment is tax-free, and the remaining amount of each payment is taxable at either capital gain or ordinary income tax rates.
Payout Rate:
Timing:
Gift annuity payments are based on a rate schedule set by the American Council on Gift Annuities. Under these rates, the older the age of the person receiving the gift annuity payments, the higher the rate.
A gift annuity contract can begin making payments immediately (current gift annuity) or defer payments for at least one year (deferred gift annuity).
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GIFTS OF REAL ESTATE If you have property you or your family no longer wants, consider transferring ownership to FFA. Doing so can directly benefit FFA members while also qualifying you for a substantial tax deduction.
BEQUEST THROUGH YOUR WILL OR TRUST NEED
SOLUTION
You would like to give your farm or ranch to FFA to support agricultural education and receive an estate tax deduction.
By including a gift of real estate in your will or trust, you can wait to transfer title until after your lifetime.
DONOR
BENEFITS
Donors who may not have family members who want or need use of the land and who may benefit from an estate tax deduction.
1. Flexibility: You retain the right to control the property during your lifetime. 2. Tax Deduction: The value of the property is not subject to federal estate tax.
OUTRIGHT GIFT NEED
SOLUTION
You own land you do not wish to continue to maintain and would like a current tax benefit.
By transferring full title to FFA, you can witness your property being put to use in direct support of FFA members and programs.
DONOR
BENEFITS
Anyone who does not have a present need for real estate they own but who desires a current income tax deduction.
1. Bypass Gain: By transferring ownership to FFA rather than selling your unwanted land, you bypass capital gains tax. 2. Tax Deduction: The gift of real estate can qualify you for a current income tax reduction. 8
GIFT A REMAINDER INTEREST WITH A RETAINED LIFE ESTATE NEED
SOLUTION
You want to leave your farm to FFA, but still need use of the land; however, you also want a current income tax deduction.
You can deed a remainder interest in your property to FFA while retaining a life estate in the property, thereby entitling you to continued use for your lifetime.
DONOR
BENEFITS
Donors who want to remain in possession of their land, but desire a current income tax deduction.
1. Tax Deduction: You receive a current federal income tax deduction for the present value of the remainder interest in the property. 2. Preserves Lifetime Use: You are able to use and control the property during your life.
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502 S. 19th Ave, Suite 102 Bozeman, MT 59718 406-582-4118 | www.montanaffa.org