How to Include United Way in Your Will or Estate Plan
It is easy to include United Way in your will or estate plans. Here are 5 of the most popular ways to do this. We would welcome the opportunity to send you additional information or meet with you to take the next steps.
For more information talk to your accountant or financial advisor. We can be reached at (239) 433-2000.
Name United Way as a beneficiary in your will
A bequest provision can be included in your will when you are creating it, or you can amend your existing will through the use of a codicil. This arrangement provides you with flexibility and control should your circumstances change. You can designate an exact amount or asset or a percentage of the assets in your will.
Make an outright gift of cash or appreciated stock or real estate
This is an excellent technique for individuals in the highest tax bracket…or those who have sold a business or received a significant bonus and could benefit from an immediate tax deduction.
For example, Mary and Bob Smith are both highly paid professionals and received large bonuses this year.
Unfortunately, a significant portion of this year’s bonus will be eaten away by taxes. Mary and Bob also have a stock portfolio of highly appreciated stock. They decide
to contribute stock they purchased many years ago for $50,000 that is now worth $200,000. Because this stock is being transferred to United Way, they will not have to pay capital gains tax. United Way will be benefit and Mary and Bob will receive a significant income tax deduction. To produce a tailored illustration of tax benefits from giving long-term highly appreciated stock visit: http://national.unitedway.org/stock/
Name United Way as the beneficiary of a retirement plan
Perpetuating your gift through a retirement plan is simple, flexible and tax wise. Contact the administrator of your retirement plan to designate United Way as the beneficiary of your retirement plan. They can also let you know what restrictions might apply.
The benefits of naming United Way as the beneficiary of a retirement account include:
• Avoiding potential double taxation on retirement funds gift to heirs (estate tax and income tax).
• Allowing you to continue to draw money out of your retirement account while you are living.
• Providing you with the freedom to change your mind if your situation changes.
• Giving you the satisfaction of knowing that your hard-earned retirement funds will continue to impact people’s lives in our community.
Name United Way as the beneficiary of an existing or new life insurance policy
Many contributors are attracted to life insurance because it enables them to make a larger gift than they would otherwise have been able to make. Here’s how it works: you pay the premiums on a life insurance policy that will ultimately produce a sizable gift to United Way. If United Way is named as the owner and beneficiary, you will also receive a tax deduction for the annual premiums.
Benefit from a split interest gift.
A split interest gift is really two gifts, one that is present interest and one that is future interest. Typically, the present interest gift is a lifetime flow of income back to the donor. The future interest gift is the amount the charity will receive at the death of the donor. The most popular split interest gift is a charitable remainder trust. It is a gift that returns an income to you, your spouse or another beneficiary you name.
Highly appreciated but low yield stock is an ideal asset to use in a charitable remainder trust. For example, Jill Smith, age 65, contributes $200,000 of stock to a charitable remainder trust. She purchased the stock many years ago for $50,000. While the stock has appreciated significantly, it is only producing an income of $2,000 to $3,000 a year. By contributing the stock to a charitable remainder trust, Jill receives a tax deduction of approximately $78,000 and avoids $22,500 in capital gains tax. Although she can select various payouts, Jill creates a trust that will provide an income of $12,000 annually for the rest of her life. At her death, the assets within the trust will be distributed to United Way.
Another “split interest” gift is a retained life estate. This is a way to give away the future interest in your home after your lifetime. You continue to enjoy your home while you are living. Perhaps you own a home or vacation home that your children have no interest in inheriting. You can create an irrevocable provision to retain the use of your home during your lifetime…and give the remainder interest to United Way at your death. You receive a current income tax deduction for the remainder interest and remove the home from your taxable estate.