Q. I need to write a will. Can Canine Companions help me? A. Yes. Just ask for our free estate planning kit. The kit includes:
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 you estate planning kit, call Dave Bonfilio, national planned giving officer, at 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org 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 living trust. Here is some suggested language you can have your attorney review: “I give, devise and bequeath to Canine Companions for Independence, Inc., Tax ID# 94-2494324, located at P.O. Box 446, Santa Rosa, CA 95402, (the sum of $________) or (state a percentage of your residuary estate, or designate real and personal property, including exact location) for the benefit of its general purposes (or specify the specific CCI region or program you wish to support).” 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 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org.
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 is 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 Companions, call Dave Bonfilio, national planned giving officer, at 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org. Q. Is there a way to make a gift that benefits both me and Canine Companions? A. There are a number of ways in which you can establish a gift that benefits you as well as Canine Companions for Q. What is a Charitable Gift Annuity? A. The Charitable Gift Annuity is the oldest and best known of charitable gifts that pay donors income for life. The Charitable Gift Annuity is guaranteed by the issuing charity. The payments are fixed, and so completely predictable. The Charitable Gift Annuity allows you to make a gift to a good cause while giving you a current income tax deduction and payments for life. In this way, some donors discover they can make a far more generous future gift to Canine Companions for A gift annuity is simple to create. You fund your annuity with a gift of cash or stock. You are then guaranteed a fixed payment monthly, quarterly, semiannually, or annually for life. You must be at least 65 when the payments begin and your annuity must be created with gifts having a total value of at least $10,000. Your gift annuity can provide lifetime payments for one or two people. Both plans generate an immediate charitable tax deduction and partially bypass capital gains. In addition, part of your payment will be tax-free and all of your gift will pass to Canine Companions for Canine Companions for Annuity rates vary with age. The older you are, the higher your rate. Payments once established remain the same for life. The following are the single-life annuity rates effective July 1, 2008. Age Rate 65 5.7% 70 6.1% 75 6.7% 80 7.6% 85 8.9%
Here’s and example: Mary Edwards, age 75, establishes a one-life gift annuity contract with $10,000. In exchange for her gift, Canine Companions for For a confidential estimate of your rate and deduction, contact Dave Bonfilio, national planned giving officer, at 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org. Dave will need the names and the birth dates of the income beneficiaries as well as whether the gift will be cash or marketable securities. Q. Why should I consider a charitable remainder trust? A. If you need a device that will pay you for life, allow you to bypass capital gains tax on stock or real estate, reduce estate tax, and give you the satisfaction of providing for a good cause like Canine Companions for Independence, you may want to consider a charitable remainder trust. 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:
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 marital or $250,000 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. 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:
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 For a personalized analysis call Dave Bonfilio at 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org. Q. Can you provide me with an illustration of tax benefits? A. Yes, please fill out the Contact Us form and we will respond with an easy to understand illustration which can be used to help understand the type of gift you might be considering. The same service is available to your estate planning professional. This illustration can be particularly useful if you are trying to decide between cash and marketable securities. Q. What are the benefits of the pooled income fund? 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 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 1-866-CCI-Dogs (1-866-224-3647) or email pginfo@cci.org. Q. How can I give my home and keep it too? 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 1-866-CCI-DOGS (1-866-224-3647) or email pginfo@cci.org. 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 1-866-CCI-DOGS (1-866-224-3647), e-mail pginfo@cci.org or return your completed Heritage Society Enrollment Form. Q. What do some of these terms mean? A. Planned Giving: Glossary Of Words Bequest: A disposition of property by Will. More broadly, any legally binding statement that disposes of property at death. Benefits to Heirs: Charitable remainder trusts, and other income producing charitable instruments, can provide heirs or friends with income for life or a term of years. You can name a child or other individual as a successor income beneficiary when the donor sets up a charitable trust and names the child or friend as a successor income beneficiary. You must make sure that the successor income beneficiary is old enough to prevent the charitable trust from being disqualified. Codicil: An addition to a Will that explains, modifies, or revokes a previous will provision, or that adds an additional provision. A codicil must be signed and witnessed with the same formalities as those used in the original Will’s preparation. Capital Gain: The difference between the original price and a higher selling price after something has been held for at least one year. For example, stock purchased for $10 and sold at least one year later for $100 has a capital gain of $90. The gain is subject to capital gains tax. Charitable Deduction: A deduction from both estate tax and gift taxes for all assets given to charity. Life time gifts can, if properly structured, also qualify for an income tax deduction. Charitable remainder trusts and charitable gift annuities both generate charitable deductions. Charitable Gift Annuity: A contract between a donor and a charity that obliges the charity to make an agreed upon payment for life in return for the donor’s gift. Whatever remains at the donor’s death is then used by the charity to support their work. Along with the income tax deduction, the donor receives an immediate charitable income tax deduction and partial bypass of capital gain tax. Click for information about St. Anthony Foundation’s gift annuity program. Community Property: A method of holding title to the property of married persons. All income earned after marriage is usually community property. Each spouse owns an undivided one-half interest. Devisees & Legatees: Those persons who receive part or all of an estate under the Will of a decedent. Diversification: In finance, spreading investments into many kinds of investments to reduce investment risk. Double Step-Up: If property is held as community property (and not joint tenancy), both spouses’ halves of the property obtain a new basis, not just the deceased spouse's one half. Estate Planning: A legal process that allows you to determine how your assets will be managed for your benefit if you are unable to do so, when certain assets will be transferred to others, either during your lifetime, at your death, or sometime after your death, and to whom those assets will pass. Estate planning also addresses your welfare and needs, planning for your own personal and health care if you are no longer able to care for yourself. The basic tools of modern estate planning are Wills, Living Trusts, Durable Powers of Attorney for property management, and Advance Health Care Directives. Ask for Canine Companions for Estate Tax: Tax imposed by the IRS on all assets you own at your death, including life insurance and retirement benefits, plus taxable gifts made during your lifetime. Gift Tax: Tax imposed on taxable gifts made during life. Gifts to individuals are taxable if they exceed a certain amount. For example, $12,000 in 2007. Gifts to qualified charities are not subject to tax and are also tax-deductible. Gift Tax Annual Exclusion: The amount that can be given each year to each person free of gift tax. Heirs: Generally, those persons who would inherit by Intestate Succession. Income Tax Benefits: With charitable remainder trusts, donors receive an immediate income tax deduction when they transfer assets to the trust. The deduction is determined by IRS tables. A tax deduction less than 10% of the face value of the trust will disqualify the trust. The key factors in determining the deduction are (1) the ages of the income beneficiaries when a gift is made to the trust and (2) the payout rate of the trust. Care must be taken to make sure the deduction is large enough to satisfy the requirements of the IRS. In general, the older the income beneficiaries, the greater the income tax deduction; the lower the payout rate, the higher the income tax deduction. Life Estate: In common law, ownership of land for the duration of a person’s life. In a charitable context, the right to use for life property that has been deeded to a charity. For example: Alice Jones, 78, deeds her home to a favorite charity while retaining the right to live in the home for life. Ms. Jones is said to have entered into a Charitable Life Estate Agreement. By irrevocably transferring ownership of her home to charity, Ms. Jones receives a substantial income tax deduction. The deduction is reduced by the value of her life estate, that is, her right to continue to use the home. She also must continue to maintain the home in good repair and pay all ordinary expenses, including insurance and property taxes. Tax and Income Calculations: Canine Companions for Intestate: If you don't have a Will, you are said to die "intestate." Intestate Succession: Statutory system setting forth which relatives will receive the estate of a person who died without a Will. Inventory Form: A form that allows you to list what you own in preparation for meeting with an estate planning attorney. Click here if you would like to review a typical inventory form. Joint Tenancy: A method of holding title to property with another which allows that property to pass automatically to the surviving property owner. Heritage Society: The Heritage Society of Canine Companions for Lifetime Income: The payments made to individual income beneficiaries of a charitable trust, usually for life. Payments can also be established for a term of years, rather than for life. Living Trust: An entity created by execution of a document entitled Trust Agreement. The person who creates the document is the Trustor. The Trustor transfers most of his or her assets into the trust during his or her lifetime. Living trusts are also referred to as “Revocable Trusts,” “Revocable Living Trusts” and “Inter Vivos Trusts.” A Living Trust is revocable and amendable by the Trustor, that is, the person who established the trust, during the lifetime of the Trustor, and all assets can be removed by the Trustor at any time. Upon the Trustor's death, the Trust assets pass to the persons named in the Trust, without probate. Payment Rate: The stated payment rate from a charitable trust to the trust’s income beneficiaries. The rate must be at least 5% but not so high a rate that the charitable income deduction generated by the trust would be less than 10% of the trusts value when funded. Probate: A court proceeding by which a deceased person's property is administered to clear title to the property, pay debts and expenses, and distribute the property to the proper heirs or devisees. Separate Property: A single person's property is separate property. Property that was owned by a spouse before marriage or that is inherited after marriage is that spouse's separate property. Stepped-Up Basis: For income tax purposes, assets of a decedent get a new basis equal to fair market value at the date of death. This means that, when the property is sold by an heir, there will be little or no capital gains tax because the capital gain is the difference between the basis and the fair market value. Term of Years: A specified length of time that a trust lasts. For example, a charitable remainder trust may last for a term of years, not to exceed 20, rather than for the life expectancy of the income beneficiary. Testate: If you have a Will, you are said to die "testate." Trustee: The person who is in charge of administering the Trust (i.e. making investments, distributing the trust income and principal pursuant to the provisions in the Trust Agreement). During the Trustor's lifetime the Trustor is usually the Trustee. If the Trustor becomes incapacitated or dies, then the next person named in the Trust Agreement becomes the Trustee. Undivided Percentage Interest: A stated percentage of a whole property, rather than a specifically defined part of a whole. For example, a person may own a 50% undivided percentage of the house rather than own the second floor only. Unified Credit: The amount of your estate that can pass to anyone before an estate of gift tax is payable. Unlimited Marital Deduction: A deduction from estate tax or gift taxes for all assets passing outright to a spouse or to a qualified trust for a spouse (except for non-US citizens). Will: A document which directs what happens to your property at your death. |
Planned Giving Frequently Asked Questions
Planned Giving Frequently Asked Questions