A guide for those who wish to give a planned gift.
s a member of Manresa’s community, you may have picked up this guide with a desire to help Manresa continue its Mission, but are not quite sure how. Planned gifts are a wonderful way to achieve your goal. You need not neglect your family when making a gift to a charitable organization. Nor do you need to be wealthy or sacrifice your lifestyle. You can keep your assets and actually earn additional income with a properly structured gift. Your gift will benefit Manresa, but your true legacy will be the lessons your loved ones learn about your values and priorities as embodied in Manresa’s motto to be “a Fire That Kindles Other Fires.” Do you have questions about how to leave your own legacy? You can choose among various options available to you for your gift, many of which include financial and tax benefits such as: • • • •
Immediate income tax deduction Lifetime income at an attractive rate of return Reduction of federal and state estate taxes Elimination or reduction of the capital gains tax if appreciated assets are donated
This guide is designed to get you started thinking about your options before your discussion with the appropriate professional. A properly drawn will is one of the most important papers you will ever sign. It is a document that will speak your mind and heart, and ensure that your wishes for your loved ones and estate (regardless of its size) are realized. This guide is for your information on planned giving opportunities. It is not intended as legal or tax advice. You should consult with your attorney, tax advisor, financial advisor or insurance counselor in planning these transactions.
THE MISSION OF MANRESA: To help men and women grow spiritually through prayer, reflection, guidance and teaching according to the Ignatian tradition
GIFTS THAT PROVIDE INCOME TO YOU
A Charitable Remainder Unitrust (CRUT) is an irrevocable trust into which you can transfer assets—such as investment property—that have appreciated in value well beyond their original cost. The CRUT can provide income that will last the rest of your and your spouse’s lives or for a specified number of years (maximum 20.) When the income has been fully distributed under the terms of your trust, Manresa will receive the assets remaining in the trust. The CRT can provide income, estate and capital gains tax benefits, and a lasting gift to Manresa. A Charitable Remainder Annuity Trust (CRAT) pays a fixed income based on the allowable percentage you choose, and the value of the assets when the trust is established. For example, if you establish a 7% two-life annuity trust with assets of $100,000, you and your spouse would receive $7,000 each year for the rest of your lives.
HOW A CHARITABLE REMAINDER TRUST WORKS CRUT or CRAT
CHARITABLE REMAINDER TRUST
A Charitable Gift Annuity, like the charitable remainder annuity trust, pays you a fixed dollar amount. The amount is determined at the time of the contribution and is based on your age and, if you have designated another beneficiary, on his/her age as well. For older senior citizens, annuity rates may be 7% or 8%, or even higher. Part of the annuity payment is tax-free, and the initial charitable deduction offers substantial income tax savings. This is an easy option to choose with very simple paperwork. A Deferred Gift Annuity is a gift annuity where you defer the receipt of income until a later date, such as retirement. This offers several benefits: your annual income will be higher when the payments begin, and the contribution secures a larger current income tax charitable deduction. This is also and easy option.
Helen, age 80, contributes $10,000 to Manresa in exchange for a Charitable Gift Annuity. Her guaranteed rate, assigned by the American Council of Gift Annuities based on her age, is 6.8%. Her annual income will be $680 each year for the rest of her life. Helen receives this income, in part and with some limits, tax-free, and also receives a charitable tax deduction for a portion of her gift.* A Charitable Gift Annuity is particularly suited for those aged 65 or above. Those who are younger should consider a Deferred Gift Annuity.
GIFTS THAT ALLOW YOU TO KEEP YOUR ASSETS
A Retained Life Agreement allows you to continue to live in property you own throughout your life while receiving a substantial tax savings today. You would simply retain the use of your home, vacation residence, commercial property or farm and deed the remainder interest in the property to Manresa Jesuit Retreat House so that Manresa will own the property after you pass away. The deduction could save you substantially on your current income taxes and allow you to enjoy your residence or vacation home throughout your lifetime. A Charitable Lead Trust is the reverse of the charitable remainder trust and functions as a temporary gift, or loan, to Manresa Jesuit Retreat House. That is, instead of paying income to you, the trust pays income to Manresa for a term of years, before the principal reverts back to you, a family member or another beneficiary. A lead trust can greatly reduce estate taxes, allowing you to make a significant gift to Manresa and ultimately pass more to your heirs.
George and Paula, both age 65, wish to give Manresa a gift, but with only modest assets, are not sure how to do so. They decide to deed their primary residence to Manresa, with the proviso that they would be able to live there until the end of both of their lives. Since they want to leave a gift for their children as well, George takes out a life insurance policy on himself for the value of the home. At his passing, the children will receive the proceeds from the insurance and Manresa will receive the property after the second spouse passes.*
Marge is 55 years old and wants to make a significant gift to Manresa. She decides to purchase a whole life insurance policy in the amount of $100,000, naming Manresa as owner and beneficiary, with premium costs of $3,000 per year. Marge is able to take a tax deduction equal to her premium cost of $3000 per year. Her policy was written to be paid in full in 10 years. So, for only $30,000, Marge will contribute $100,000 to Manresa upon her death.*
*These examples are illustrations only, not actual case studies.
GIFTS WITH OTHER TAX BENEFITS
Appreciated Securities may be contributed directly to Manresa by transferring the
actual stock certificate or through an account transfer arranged by your Financial Advisor. In either case, you avoid the tax on any potential gain and receive a charitable income deduction. An IRA owner who is at least age 70Â˝years old may make a direct charitable contribution of the minimum required distributions directly to Manresa, avoiding income tax on the amount and receiving a charitable deduction. Manresa can also be added as a beneficiary to your 401k, IRA, Roth IRA, TSA, Annuity or 403b plan. Manresa can be one of several beneficiaries or the sole beneficiary.
Insurance offers a variety of possibilities for gifting Manresa. You may have an old policy
that you no longer need. If you assign the policy to Manresa (transferring ownership) you are entitled to an income tax charitable contribution deduction. You can also simply designate Manresa as the beneficiary and your estate will receive a Charitable Gift Estate Tax deduction when Manresa receives the policy proceeds. Manresa can be designated as a contingent or a secondary beneficiary.
Wealth Replacement Trust is an irrevocable life insurance trust that holds life insurance on the life of the donor in the amount of the charitable gift. When a gift is given to Manresa (a charitable tax deduction), it reduces the assets to be handed down to the heirs. An insurance policy is purchased equal to the amount of the gift. The donor pays the premiums. Upon the donorâ€™s death, the trust collects from the insurance company, in effect replacing the amount of the gift. The trust distributes the cash amount to the beneficiaries free of income and estate taxes. This way the heirs still receive their full inheritance in the form of cash rather than an asset that may not be liquid.
Dennis, age 40, purchased $500 worth of stock in ABC Company 15 years ago. Its current value is $2000. Dennis gives the stock directly to Manresa, allowing him to claim a $2000 Charitable Deduction on his Federal and State Income tax returns. Depending on his tax bracket, he could save as much as $800. He also saves the Capital Gains Tax that would be due if he sold the stock himself. This allows Dennis to give a sizable gift to Manresa that cost him only $500 originally. On the other hand, if Dennis had stock that has decreased in value, he would sell the stock, take the loss, offsetting the gains from other investments and give the cash to Manresa. He would not only receive the tax advantage for the charitable gift, but also for the capital loss.*
A NOTE ABOUT ESTATE TAXES
For many investors, estate taxes are no longer a concern, but for the select few, estate taxes have actually gotten worse yet it is one of the most overlooked areas of planning. The tax liability may be as much as 40%. To cut down on your estate tax liability, consider the charitable deduction, which allows you to deduct every dollar you give to charity through an outright bequest. In addition, property placed in a charitable trust generally will not be subject to Federal Estate Tax when the beneficiary dies.
If Your Goal Is:
Your Gift Should Be:
Gifts you make Supplement income with fixed annual payments. Charitable Gift Annuity with Manresa Reduce gift and estate taxes on assets passing to heirs. Charitable Lead Trust Create a hedge against inflation over the long term. Secure a fixed and often increased income. Give your personal residence or farm but continue to live there.
Gifts after your Make a large gift at little or no cost to yourself. lifetime Avoid the twofold taxation on retirement plan assets. Defer a gift until after your lifetime. Avoid capital gains tax on the sale of a home or other real estate. Gifts you make Make a quick and easy gift of appreciated property. now Make a quick and easy gift of cash.
Benefits and Advantages for You
Charitable Remainder Trust Charitable Remainder Annuity Trust Retained Life Estate Life Insurance Gift Retirement Plan (i.e. IRA or 401K) Bequest in Will or Living Trust Real Estate Gift Outright Gift Appreciated Property Outright Gift of Cash
FOR MORE INFORMATION Your name Second name Address City
Best time to call
□ I am interested in more information. (Please check all that apply) □ I would like information about how to receive income and make a gift at the same time. □ I would like information about how to pass assets to heirs and make a gift at the same time. □ I would like information about how to name Manresa Jesuit Retreat House in my estate plans. □ I would like to speak to someone, without obligation, about creative giving options. □ I would like an illustration for a charitable gift annuity. Gift amount to be illustrated: $
Birth date of annuitants
(Please note that the minimum gift amount is $10,000)
For your records, I/we have enclosed the relevant portion of my/our estate plan that pertains to my/our gift through: □ My will or living trust □ Insurance policy □ Trust arrangement □ My retirement plan assets □ Other □ I/we approve public recognition of my/our gift. □ I/we choose NOT to be publicly recognized for this gift. THIS INFORMATION WILL BE KEPT IN THE STRICTEST CONFIDENCE.
Please complete and return to : Rita Tinetti, Development Director 1390 Quarton Road Bloomfield Hills, MI 48304 firstname.lastname@example.org (248) 644-4933 ext. *815
FOUR EASY STEPS TO REMEMBER MANRESA IN YOUR WILL
whether you’d like to make a gift of a specific amount or if you’d 1. Determine like to leave a percentage, allowing your gift to remain in proportion to your estate size.
if you want to direct your gift to help particular projects or leave 2. Decide your gift unrestricted, allowing it to be used for our most pressing needs. If you choose to restrict your gift, please contact us so we can ensure that your intent can be fulfilled. 3. See your attorney to include your gift in your will or revocable living trust. The bequest language below will be helpful to take with you. 4. Ifyouyouanddesire, please notify us of your intention so we can properly thank keep you informed of ongoing activities. We are happy to adhere to your wishes regarding anonymity.
A charitable bequest is a distribution from your estate (through your Trust or Last Will and Testament) to a charitable organization, such as Manresa Jesuit Retreat House. The bequest may be a specific monetary amount or a percentage of your estate or trust. Sometimes other assets are gifted, such as land, stocks, bonds or automobiles. While we recommend that you carefully review the terms of your proposed will and/or trust with a professional trained in handling trusts and estates before making decisions regarding bequests that you want to make, the following provides you with an example of common language that could be used to make a charitable bequest to Manresa in a will or trust: “I give, devise and bequeath to MANRESA JESUIT RETREAT HOUSE of BLOOMFIELD HILLS, MI, or its successor, the sum of $___________ (or a description of the specific asset), to be used for such charitable purpose(s) as MANRESA JESUIT RETREAT HOUSE, or its successor, may decide in its discretion.” Please let us know your intentions regarding planned giving. We would like to honor those of you who have already made arrangements for a planned gift to Manresa and help those who would like to, but have not yet, made arrangements. The Development Office is here to serve you.
Rita Tinetti, Development Director (248) 644-4933 ext. *815 email@example.com
A guide that explains all the options for gifts including annuities and language for wills.