Q.
I need to write a Will. Can Canine Companions for Independence help
me?
A.
Yes. Just ask for our free estate planning kit. The Kit includes:
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An Estate Planning Inventory Form, to help you get a clearer idea
of the worth of your estate.
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Information on how to remember Canine Companions for Independence
in your will
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Estate Planning: Getting Started, a brochure
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Revocable Living Trusts, a brochure
Effective
estate planning usually takes time, effort and a good attorney.
In the end your plan will allow your family to avoid the delay,
dissension and needless expense that often occurs when a loved one
dies without a Will. Once you have taken care of your family's needs,
please consider a thoughtful bequest to Canine Companions.
To
order your estate planning kit, call Dave Bonfilio, National Planned Giving Officer,
at 707-577-1789 or send us
an e-mail.
Q.
How do I include Canine Companions in my will or living trust?
A.
The most common way people remember Canine Companions in a will
or living trust is through a charitable bequest. You do not have
to rewrite your current documents. You simply add an amendment,
called a codicil, to your will or living trust. Here is some suggested
language you can have your attorney review:
"I
give and bequeath to Canine Companions for Independence, located
in Santa Rosa, California, ___% of my estate" (or state a specific
dollar amount, or describe real or personal property, including
exact location).
Your
bequest is entirely under your control during life and becomes irrevocable
only at death. If you have questions about bequests, call Dave Bonfilio, at 707-577-1789 or send
us an e-mail.
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Q.
What’s the big advantage in making Canine Companions a beneficiary
of my retirement plan?
A.
A designation in your IRA or other retirement plan may be a very
cost-effective way of making a gift to Canine Companions. If you
leave your retirement plan to your children, they will have to pay
income tax on either a lump sum distribution or the income stream
from the plan. Canine Companions does not pay this tax. Here’s an
example of what this can mean to your heirs:
A widower
died a few years ago. He left his $300,000 house to charity and
his $300,000 retirement plan to his relatives. He should have done
just the opposite. The relatives had to pay income tax on the $300,000
in the retirement plan, an $80,000 cost to them. If they had received
the home, and the charity had received the retirement plan payment,
no one would have paid income tax. For more information on the advantages
of retirement gifts to Canine Companion, call CCI's National Planned Giving Officer, Dave Bonfilio,
at 707-577-1789 or send us
an e-mail.
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Q.
What kind of donors should consider a charitable remainder trust?
A.
Donors who need a device that will pay them for life, allow them
to bypass capital gains tax on stock or real estate, reduce estate
tax, and give them the satisfaction of providing for a good cause
like Canine Companions for Independence.
Anything
you place in a charitable trust--cash, stock, real estate--is invested
by the trustee to pay you income for the rest of your life and,
if you wish, pay your heirs for life or for a term of years. After
the death of all income beneficiaries, what remains in the trust
passes to Canine Companions.
Your
trust may provide you with some important tax benefits:
-
An immediate income tax deduction for a percentage of your gift.
We will be happy to give you an idea of the size of your deduction.
We simply need to know the amount to be placed in the trust, the
ages of the income beneficiary(ies) and the payment rate of the
trust.
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No tax on the sale of appreciated property. From the donor's point
of view, this is often the most important tax benefit. Sometimes
thousands of dollars that would have gone in capital gains taxes
remain in the trust to generate payments to the income beneficiaries.
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The trust principal is not subject to estate tax. Property that
might otherwise be subject to federal estate tax, which can be has
high as 55%, is preserved from estate tax entirely.
Appreciated
real estate is often an excellent asset to place in a charitable
trust. Mature investment properties are frequently earning only
two, three, or four percent of their fair market value per year.
When these properties are sold and the proceeds reinvested by the
trust, earnings often increase significantly.
Under
ordinary circumstances, owners face substantial capital gains taxes
when they sell rental properties or commercial real estate. In some
cases personal residences are also subject to capital gains taxes
even after the $500,000 exemption has been used. In any case, because
your charitable trust will be selling the property, there will be
no capital gains taxes due when the real estate is sold. Thus the
entire proceeds of sale can be reinvested to produce more income
for you.
Some
people find it useful to give an undivided percentage interest of
their property into a charitable trust rather than all of it. For
example, a donor placed 75% of a vacant lot into a charitable trust.
When the lot was sold, about $70,000 came directly to her from the
sale while $210,000 remained in the trust. Some of her $70,000 was
taxable, but she used the income tax deduction generated by her
gift to the trust to offset the tax due on the gain built into the
$70,000 she received.
Gifts
of appreciated stock are ideal for funding a charitable remainder
trust because the stock can be reinvested by the trust for greater
income while bypassing capital gains taxes at the time of the sale.
The
simplest way to gain these benefits with gifts of cash or stock
is to open a pooled income fund account benefiting Canine Companions.
It's as simple as opening a savings account, and an account can
be started with as little as $5,000. Like contributions to an individual
trust, gifts to the pooled income fund give donors an immediate
income tax deduction and lifetime income. Ask us for our pooled
income fund disclosure statement before contributing.
If
our pooled income fund does not meet your needs, there are two basic
types of charitable remainder trusts you can use. An annuity trust
will pay you a fixed dollar amount for the rest of your life. A
unitrust will pay you a fixed percentage of the trust corpus each
year, so if the value of the trust increases over time, your income
increases with it. By law, your trust must pay you at least 5%.
You may choose a higher payment rate if you wish, but the higher
the payment rate the lower your income tax charitable contribution
deduction. Also, selecting the highest rate possible may not work
in your best interests for another reason. If trust principal declines
under the strain of meeting the higher rate, your income will decline
with it. On the other hand, a lower payment rate may allow the principal
to grow, and your income will grow with it. Additions can be made
to a unitrust at any time, but you can contribute to an annuity
trust only once.
Finally,
your trust must have a trustee. If you have an individual trust
tailored to your circumstances, the trustee can be a commercial
institution such as a bank or trust company, an individual with
professional experience in trust management, a relative, or yourself.
There are some complications in acting as trustee yourself, but
it can be done if you understand and comply with IRS regulations.
Canine Companions will be happy to supply you with a list of possible
trustees or information on being your own trustee.
The
basic advantages of charitable trusts are not difficult to understand:
- diversification
of your assets without incurring capital gains taxes,
- lifetime
income,
- immediate
income tax benefits,
- reduction
of estate tax,
- the
satisfaction of providing for a good cause.
There
are even ways these trusts can benefit your heirs that we have not
covered. But the first thing you should do is find out if a charitable
trust makes sense for you.
Canine
Companions for Independence will provide you with tax and income
calculations tailored to your particular situation. This will give
you and your advisors the information needed to make an informed
decision as to whether a charitable trust meets your financial and
philanthropic objectives. All information is provided confidentially
and without cost or obligation. Canine Companions for Independence
deeply appreciates your willingness to help continue its work
For
a personalized analysis call Dave Bonfilio at 707-577-1789 or send
us an e-mail.
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Q.
How does the Canine Companions Pooled Income Fund work?
A.
A charitable pooled income fund is a giving vehicle put in place
by a charity for its donors. Contributions to the fund pay income
to the donor for life. At death, whatever is left in the donor's
account passes to Canine Companions. Here are some highlights of
the Pooled Income Fund:
The
Fund pays you or your beneficiary(ies) quarterly income for life.
Payments will fluctuate with changing economic conditions.
Contributions
to the Fund are tax deductible for those who itemize. How much you
can deduct is determined by the amount of your contribution and
the age of the beneficiary you select. The older the beneficiary,
the greater the deduction.
Contributors
often give appreciated securities to the Pooled Income Fund because
the fund can sell these securities without being subject to capital
gains tax.
After
the death of all beneficiaries, the gift principal passes to Canine
Companions for Independence to support its work. The gift principal
is not subject to estate tax.
The
initial minimum contribution to the Pooled Income Fund is $5,000.
Contributions of $1,000 or more are allowed anytime thereafter.
Pooled
Income Fund contributions should be looked upon primarily as gifts,
not as investments.
Pooled
Income Funds were developed in 1969 to allow individuals to contribute
into a common charitable trust to gain the tax and income advantages
available before only to those who could afford to establish their
own charitable trust.
The
Pooled Income Fund gives contributors the same tax and financial
advantages of most individual charitable trusts without their having
to contribute the more substantial amounts individual trusts require
or to pay set-up costs.
To
find out the tax deduction you should claim, the current rate of
return of the Fund, and the answers to any other questions you might
have about Canine Companions and its Pooled Income Fund, call
Dave Bonfilio at 707-577-1789 or send
us an e-mail.
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Q.
How can I give my home and keep it, too?
A.
A charitable life tenancy agreement allows you to give a personal
residence or farm to Canine Companions for Independence while retaining
the right to live there for life. Donors who enter a life tenancy
agreement receive an immediate income tax deduction. The deduction
is based on the present value of the home discounted by the estimated
length of time the charity must wait to receive the home. To put
it simply, a person age 70 will receive a larger deduction than
will a person age 50.
The
IRS grants the deduction even though the donor continues to enjoy
full use of the home. But the IRS also expects the owner to have
full responsibility for the care and maintenance of the home. That's
why life tenancy agreements simply continue things as they are currently,
with the donor dealing with maintenance, property taxes, insurance
and the like. The major benefits to the donor, then, are continued
use of the home, an immediate charitable income tax deduction, the
avoidance of probate, the avoidance of estate tax on the property,
and the satisfaction of making a substantial gift to Canine Companions
during one's lifetime. For further information call Dave Bonfilio at 707-577-1789 or send
us an e-mail.
Q.
What is Canine Companion’s Heritage Society?
A.
CCI created this society to honor those who have remembered the
organization in their estate plans through thoughtful bequests and
other planned gifts. Those who do allow us to use their names will
be recognized in the CCI Annual Report. All members receive a commemorative
award and are invited to special CCI events.
Q.
What should I do if I have remembered Canine Companions in my estate
plan?
A.
We would be honored to enroll you in Canine Companion’s Heritage
Society, so please let us know of your bequest by calling Dave Bonfilio at 707-577-1789 or send us an e-mail.
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By
making a gift to CCI in your estate plan, you can continue to
help us to enhance the lives of people with disabilities well into
the future. In addition to this opportunity to make a
difference, there may also be tax benefits to these gifts. Meet
with your financial professional to learn more.