Some 60% of Americans die without a valid will. This is unfortunate in most cases, because state laws will take over and will distribute your probate estate in accordance to a prescribed formula — possibly in ways that you would not choose. Any charitable interests you wanted to benefit will not occur.

One thing is certain as we go through life and that is change.

The circumstances of life change constantly. If you have taken steps to write a will, you can be certain that your circumstance and the makeup of your estate will change from time to time. It is important that you do not procrastinate to get your will amended or even rewritten as these changes in life occur. Here are some common events that should nudge you to change your will: marriage, divorce, a new baby, stepchildren, named heirs pass away, you move from a common-law property state to a community-law property state or vice versa, you dispose of or purchase significant assets, guardianship is no longer needed for your adult children, you change your mind about your bequests to heirs, you wish to add or change a charitable beneficiary.

Some states allow an individual to compose a will. If it is properly witnessed and signed, many Probate Courts will accept such a will.

However, most people have no idea how to get started with such a task. They wonder if they will adequately cover all the bases in a self-authored document.

A will is a very important legal document, and it is wise to employ the expertise of a qualified attorney. A will is one of the least expensive legal documents you would pay for, but a well-written document could save your heirs much more in dollars and hassle.

An executor or personal representative is the person you assign the responsibility to manage and distribute your estate in accordance with your will. An executor’s work will be monitored by the Probate Court. An executor does not need to be an expert in finances, probate law, or taxes. He or she can and should hire such experts that are needed for assistance. A good executor will be honest and organized, possess good common sense, and be willing to serve in this capacity. Most people will name their spouse or an adult child, or some other close heir. If possible, name someone who lives nearby and who is familiar with your financial matters. That will make it easier for the person to do chores like collecting mail, selling assets, and finding important records and papers.

This is the court that determines the validity of a will and provides judicial oversight over the distribution of the estate. If there is no valid will, then the Probate Court will appoint an administrator of the estate to facilitate the estate’s distribution in accordance with state law.

Non-probate assets are any assets in your estate that will pass to heirs outside of the Probate Court. Examples include jointly held property such as real estate, jointly held bank accounts, and assets that will pass to heirs based on a death benefit beneficiary designation that are prestated in a life insurance policy or qualified retirement plan (such as an IRA).

Additionally, some people title all their property to a living trust, and at death, the named trustee will distribute or manage assets in accordance with the trust document. The trust and assets possessed by the trust are not reviewed by the Probate Court. In states where probate fees are expensive, a living trust can save on those costs. Also, those who own property in another state may want to consider a living trust so that they do not have to deal with two Probate Courts. 

This is a simple amendment to a will, which avoids the cost and complication of rewriting an entire will. The codicil must be signed and witnessed or notarized as is the original will.

Simply contact your IRA or retirement plan administrator and request a copy of the Change of Beneficiary Form. You can fill this in as you wish and include DonorsTrust for a portion or all of the remainder of your plan’s assets.

For gifts at death, any portion of your retirement plan assets that are given to a qualified charity will also qualify for income tax, inheritance tax, and federal and state estate tax deductions as applicable to the size of your estate and your state of domicile. Any assets coming out of your plan to your heirs may be subject to all of the taxes mentioned above.

It is important that you contact us so that we can assist you with transfer instructions. Or, you can use our Stock Transfer Form to facilitate the gift. If you own securities in a brokerage account, we can help you set up an electronic transfer of the shares to our brokerage account. If you possess actual stock certificates, we can tell you how to sign the certificates over to us and fill out a stock power form.

Assuming you are giving long-term (owned for 12 months or more) appreciated securities, you will receive a charitable income tax deduction equal to the fair market value of the shares. For common stock this is typically the mean value on the date that we take control of the shares you give. You will pay no capital gains tax. Gifts of stocks are deductible up to 30% of your adjusted gross income the year you make your gift. Any excess amount can be rolled over into the next tax year, for up to five additional tax years if needed.

It is generally our policy to liquidate any donated stock shares immediately after receiving them, so that we can use the cash proceeds to support the overall mission of DonorsTrust.

In many cases yes, and considerable tax benefits can result. However, giving closely held stock is more complicated than giving publicly traded securities and may be subject to certain transfer restrictions. We stand ready to assist you with your gift intention. One prerequisite to our acceptance of a gift of closely held stock is that the business or the shares have had a recent qualified appraisal. Please contact us so that we can walk you through the process.

Simply contact your life insurance company and request a Change of Beneficiary/Ownership Form. Designate us as the new owner and beneficiary of your policy.

If you give your policy to us while you are still alive, you will receive an immediate income tax deduction for the current value of the policy. In order for you to get this deduction when the charity is the policy owner, you make donations to DonorsTrust so we have funds to pay the insurance premiums. Put another way, the donor covers the premium payments that the charity now makes on the gifted policy by making regular additional monetary gifts to the charity. If you retain ownership of the policy, benefits payable to us at death can save you federal and state estate taxes depending on the size of your estate and your state of domicile.

Here are some questions we will need to answer to determine if your property will be helpful to us:

• Is the property void of any liens?
• Are there any environmental concerns with the property?
• Can our charity actually use the property for our work?
• Is the property marketable and salable within a reasonable period of time?
• What are the costs associated with accepting and holding the property?
• Can we realize a positive net return on this property?

You will receive an income tax deduction equal to the appraised fair market value of the property. An independent qualified appraisal is required for this purpose and it is up to the donor to acquire such an appraisal. Donating your property may also reduce your estate costs and taxes as well.

In many cases the answer is yes. Real estate can be transferred to a charitable remainder unitrust which will provide the donor with tax reduction benefits as well as setting up an income stream for beneficiaries such as a spouse, children and/or other loved ones.

The key question to determine is whether or not your donation has a legitimate use related to the charitable mission of our organization. For example a gift of art work or a stamp collection can enhance an educational purpose; a gift of a piano or other musical instrument can enhance a musical program; a gift of kitchen equipment can enhance a feeding program, etc. If your gift is related to our charitable work then your income tax deduction is based on the fair market value of the property. For gifts of property with a value of $5,000 or more, an independent qualified appraisal of the property is required by the IRS.

If your gift of personal property has no relation to our charitable work, then your tax deduction is limited to your cost basis in the property. We suggest that you acquire IRS publications 526 and 561 to review all the comprehensive information available for gifts of personal property.

In some cases the answer is yes. Personal property can be transferred to a charitable remainder unitrust which will provide the donor with tax deduction benefits as well as setting up an income stream for beneficiaries such as a spouse, children and/or other loved ones. Only personal property with a value of $50,000 or greater should be considered for this purpose.

A flexible gift annuity is a form of deferred gift annuity. However, instead of setting a fixed date in the future for the start of payments, as you would with a deferred gift annuity, you select a range of years or a "window" within which you can elect to start the payments.

With the flexible start date option, you can set a number of years as a window to begin receiving payments. Then you can wait to choose your payment start date until you're ready. Because your annuity rate will be determined by your age and the number of years you wait to receive the first payment, your lifelong income payment rate will increase each year you decide to delay your first payment.

Your income tax charitable deduction is based upon the first year in the window you can start to receive payments. So if you decide that you want to start receiving payments sometime in the window 5 to 15 years from now, you income tax deduction is calculated based on the assumption that you start taking payments in year 5, even if you wait until year 15 to do so. For the saavy donor, this means that you want to make the first year you are eligible to take payments the year you are likely to actually want payments. Otherwise, you are not maximizing your income tax charitable deduction. You claim your deduction at the time you make the gift to fund the flexible payment gift annuity.

Just as with the regular and deferred gift annuities, payments from flexible gift annuities are taxed based upon the assets used to fund the gift annuity. For example, if you fund a flexible payment gift annuity with cash, a portion of each payment is taxed at ordinary income tax rates and a portion is tax-free return of principal. However, when funded with appreciated stock, a portion of each payment is taxed as ordinary income, a portion as capital gain, and a portion is tax-free return of principal. We can help you to determine the taxation for your particular gift.

Payments to a non-spouse can impact the taxation of your gift. Should you set up a flexible payment gift annuity with payments to an elderly parent or loved one, if the payments are more than the annual exclusion amount for the year, then you may be subject to gift tax each year. If you fund the annuity with appreciated stock, you will owe some capital gains tax in the year you make the gift. Before setting up a gift to benefit someone other than yourself or your spouse, be sure to explore these issues with your tax advisors.

If you are absolutely certain about the start date when you want to receive payments, it makes sense to use a deferred gift annuity. After all, you could forget to elect to start the payments on your flexible gift annuity and the money would not be available that year.

A flexible gift annuity can be used for any purpose when you might want supplemental income in the future. They are most commonly used to supplement retirement savings. Many individuals max out what they can contribute to a tax-deferred, qualified retirement plan like a 401(k). For those individuals, a series of flexible gift annuities allows them to put away money now, get a partial income tax deduction and add tax-advantaged payments in their retirement.

A flexible gift annuity is a simple contract between you and DonorsTrust. Once the contract is executed, you do nothing until you inform us that you would like to start receiving payments. We then turn on the payment stream, making payments as stated in the contract. Each year, we issue a Form 1099 showing how the payments are taxed, which should be shared with the tax preparer. When the annuity ends, any amounts remaining are put to use for our charitable mission, as you have directed.

In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.

Typically, such a trust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. An annuity trust may also hold tax-free bonds.

Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

Your income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal.

Yes, subject to certain limitations.

A Charitable Remainder Annuity Trust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.

In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.

If the assets in the trust are liquid such as cash or securities, typically a unitrust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. If the trust assets are primarily nonliquid assets such as real estate or personal property, the trust may be held for growth in capital appreciation rather than current income. At some later date, the nonliquid assets could be sold (avoiding capital gains taxes) to be reinvested to produce income for the income beneficiaries.

Gifts of cash or appreciated property yield almost the same results for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

Your income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal.

In most cases, yes. The value of the trust principal will be determined by a qualified appraisal of the property. However, real estate or other property may not be producing income and thus the income beneficiaries may receive no or very little income until these assets are sold and reinvested to produce income.

Yes, subject to certain limitations.

A Charitable Remainder Unitrust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.

If you negotiate a provision in the Retained Life Estate contract for the right to lease the property for the remainder of your life estate, you can keep the additional money. You remain responsible for the taxes, insurance, and maintenance expenses spelled out in the agreement with the charity.

You are. Most likely the RLE contract will contain a provision that requires you to get prior approval from the charity to make such improvements.

Yes. The use of the asset is yours. Should you decide to lease for a while and then move back in, this gifting concept allows for that.

Yes. As long as the property qualifies under the IRS rules, it can be used to create this type of donation arrangement (i.e., you don't take depreciation or own it in a corporate structure, etc.) Check with your accountant to make sure it qualifies. Motor coaches and yachts qualify as second homes.

Maybe. If the trust is structured a certain way, you’ll be eligible to claim an income tax deduction in the year you set up your trust. However, that means that all of the trust income in following years will be taxed to you as well. Most donors structure their CLTs in a way that does not yield a current income tax deduction so that they don’t have to worry about income tax issues in the future. In both cases, you are able to provide wonderful support to DonorsTrust and to pass trust appreciation to your family free of gift and estate tax. We can provide you and your advisors with information that will help you decide which type of CLT will work better for you.

Yes, you may list your grandchildren as beneficiaries. Due to the generation-skipping transfer tax, there are more complications related to a lead trust with grandchildren as beneficiaries than one that passes assets directly to children. Most legal professionals would prefer the use of a Charitable Lead Unitrust if grandchildren are named as beneficiaries.

There is no minimum or maximum term for your Charitable Lead Trust under federal law, although applicable state law may require such a trust to end eventually (typically after several decades). However, if you want to maximize the benefit to DonorsTrust and minimize transfer taxes, we can help you determine the optimum term to accomplish your goals. Generally, the longer the term, the lower the taxable gift to your remainder beneficiaries and the higher the benefit to DonorsTrust.

Yes, although the higher the amount the greater the potential tax benefit to you and benefit to your heirs.

A CLT can act as a cash gift to us while providing tax advantaged planning to you and your heirs. Cash gifts may support any of the areas that you are most passionate about at DonorsTrust.