Charitable Instruments

A variety of giving methods tailored to your unique situation.

Charitable Gift Annuity
Income for today, a gift for tomorrow. Giving through a Charitable Gift Annuity allows you to arrange a generous gift to your community, while providing yourself a new income source you can count on for the rest of your life.

Charitable Remainder Trust
Planning for the future - for you and your community.
Giving through a Charitable Remainder Trust allows you to receive income for the rest of your life, knowing that whatever remains will benefit your community.

Charitable Lead Trust
Giving back to community and your loved ones.
A Charitable Lead Trust helps you build a charitable fund with your community foundation during the trust's term. When the trust terminates, the remaining assets are transferred to you or your heirs, often with significant transfer-tax savings.

Bequest by Will
A legacy of giving.
Including a charitable bequest in your will is a simple way to make a lasting gift to your community. When you make this gift through your community foundation, we establish a special fund that benefits the community forever, and becomes your personal legacy of giving. You can decide to do it at any age by adding to an existing will or drafting a new one. In doing so you leave a legacy to your community, while enjoying the assets you need to maintain your current lifestyle. Plus, you are able to distribute some or all of your assets, tax free.

You can give cash, appreciated stocks, or other assets. Some of the most tax-efficient asset types to give through your will come from retirement plan accounts, since heirs would be taxed on the income in respect of the descendent (IRD). You can choose to give a stated dollar amount, a specific property, a percentage of your estate, the remainder after distributions to other beneficiaries, or you can make your gift contingent on certain events.

Example Donor Story

The gift of a lifetime.
Irene Hoover and her husband owned a bakery and enjoyed a great deal of success and prominence in their hometown. After her husband passed away two years ago, Irene decided it was time for her to update her will. Part of her plan was to give something back to the community the Hoovers had loved as both residents and business owners. "Not only did Jim and I love our town, but we felt as though we owed it a lot for the success of our business," says Irene. With the help of her professional advisor, Irene revised her will to include an inheritance for the Hoovers' college-age niece, with the remainder creating the Hoover Bakery Fund, a Field of Interest Fund designed to support community development efforts. Because it will be endowed, her gift will provide a growing source of community funding for festivals, neighborhood revitalization, publicly accessible artwork, and other community improvements. "I like knowing that when I'm gone, our legacy will be one of helping others strengthen our community," says Irene.

Charitable Gift Annuity
Income for today, a gift for tomorrow.
Giving through a Charitable Gift Annuity allows you to arrange a generous gift to your community, while providing yourself a new income source you can count on for the rest of your life.

We set up a contract with you that combines immediate annuity payments with a deferred charitable gift. You receive a stream of income that is fixed, regardless of market conditions. Upon your death, we set up a charitable fund on your behalf.

Income from your Charitable Gift Annuity may add up to more than the interest and dividends you earned from holding the assets. You can use this income to supplement your own lifestyle, or that of someone else: a sibling, a dependent parent, a friend, or a former employee. You or a loved one can start receiving annuity payments immediately, or defer them to increase your charitable income tax deduction. A portion of the income may be a tax-free return of principal, while some is taxed as ordinary income or capital gains. The amount of annuity paid and the tax deduction received depends on the age of the recipient and the current annuity rate (as established by the American Council of Gift Annuities).

A Charitable Gift Annuity reduces estate assets and may reduce estate taxes. Plus, it's easier to set up than a charitable trust and is backed by the general assets of your community foundation.

Example Donor Story

A caring, careful gift.
Angela Kline was always active in her community - generous with both her time and money. After she retired and began living on a fixed income, she worried that continuing to give would sacrifice her financial security. "There are some causes I wish I could still support, mostly focused on women and girls in our community," said Angela. "But my investments are paying less than I had planned." Her friend Carmen, a CPA, told Angela that she might consider establishing a Charitable Gift Annuity through her local community foundation. "This is a good choice for Angela," says Carmen. "She is a very caring, generous person, but she also needs to feel financially secure." By giving through her community foundation, Angela receives a fixed annuity payment that adds up to more than her former investment income. Plus, upon her death, her gift will create the Kline Fund for Women and Girls.

You transfer assets into a trust, and the trust pays you or a beneficiary you designate regular income payments. Upon the beneficiary's death or after a defined period of years, the remaining assets in the trust transfer to the community foundation.

You may choose to receive a fixed income or one that changes with market conditions - income from the Charitable Remainder Trust you establish may add up to more than interest and dividends you earned from holding the assets. You can use it to supplement your own lifestyle or that of someone other than yourself: a sibling, a dependent parent, a friend, or a former employee. You can start receiving annuity payments immediately, or defer them to increase your charitable income tax deduction.

A portion of the income may be a tax-free return of principal, while some is taxed as ordinary income or capital gains. The amount of annuity paid and the tax deduction received depends on the age of the recipient and the current annuity rate (as established by the Internal Revenue Service).

You can pick one of these options for your Charitable Remainder Trust:

Annuity trust pays you a fixed dollar amount.
Standard unitrust pays you an amount equal to a fixed percentage of the net fair market of the trust and is recalculated annually.
Net income unitrust pays you the lesser of the fixed percentage specified by the trust agreement or actual trust income; some net income unitrusts allow you to make up deficiencies in past years.
Flip unitrust is a net income unitrust that converts to a standard unitrust upon a triggering event, such as the sale of an asset used to fund the trust.

Example Donor Story

A gift that pays.
James Assad was retired and in his late seventies. The stocks he owned had high market values, but they paid limited dividends. In addition to increasing his personal income, James was interested in giving to the community in which he had lived his entire life, so he decided to transfer the securities to a Charitable Remainder Trust that eventually would create a fund with his local community foundation. "The income I received from the trust is more than what I was collecting in annual dividends - by thousands of dollars. If I would have sold the stocks, I'd have paid a fortune in capital gains tax," says James. James also receives an immediate charitable tax deduction and pays less tax on trust distributions. "Plus," he says, "I know that when I pass, I've done something good." In time, James' gift will create the Assad Family Unrestricted Fund to address ever-changing community needs.

You transfer assets into a trust, which pays the community foundation an annual amount to build a charitable fund. During its term, the trust can be managed expertly by experienced trust professionals, which may help your trust investments, grow over time. When the trust terminates, either upon your death or after a specified number of years, its final assets are transferred to those you designate; any growth in the trust passes to recipients, often with significant transfer-tax savings.

A Charitable Lead Trust entitles you to a number of financial benefits. It shelters investment earnings from tax, and it offers gift, estate, and generation-skipping tax benefits. For example, trust assets are removed from your estate for estate tax purposes. You may also capture future gift tax deductions. However, at the time your trust is established, you may owe gift tax on the present value of your gift to the final beneficiary.

You have several options when establishing your trust. You can create a Charitable Lead Trust during your life or through your will. The trust contributes to charity through your community foundation - either for a number of years or for your lifetime. And, you select one of two types of Charitable Lead Trusts. A Charitable Lead Unitrust makes annual distributions of a fixed percentage of the trust assets to the charitable fund you establish. If you create a Charitable Lead Annuity Trust, the charitable fund you establish will receive a fixed dollar amount each year.

Example Donor Story

A lifetime gift for two.
Annette Bernack wanted to create a fund to support her favorite charitable interests for years to come. At the same time, she wanted to provide an inheritance for her daughter in a way that created the least tax burden. "My attorney told me that creating a Charitable Lead Trust and designating my community foundation as the beneficiary would allow me to give to the community now and provide for my daughter later," says Annette. Using a regular distribution from the trust, Annette has already begun to build a fund at her community foundation, which is, in turn, making grants to her community in areas important to her. The trust will continue to build the Bernack Family Fund until her death, after which the rest of the trust will transfer to Annette's daughter. "By giving through a Charitable Lead Trust," says Annette, "I am doing more for both my daughter and the community… and my estate will owe less in taxes."

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Community Foundation for the Twin Tiers (cftt@stny.rr.com).