Bequests

A bequest is a gift made at the donor's death by way of the person's Last Will and Testament, a trust or other document. Bequests are the most common type of planned gift.  A charitable bequest has the following characteristics:

• anyone with a Will, Trust, life insurance or annuity that is distributed at a person's death can make a bequest;

• if under a donor's Will, Revocable Trust or other revocable instruments, these gifts can be modified at any time simply by revising the terms of the documents;

• any type of property can be the object of a bequest, e.g., cash, investments, real estate, collections, art objects;

• a bequest clause in a Will or Trust can name a specific dollar amount, a specific piece of property, or can designate a share or percentage of the residue of the estate as the gift;

• they qualify for charitable gift deductions that can be used by the executor when filing the final tax returns on behalf of the estate.

Gifts of life insurance

There are two ways a person can use a life insurance policy as a planned gift:

1. naming St. Thomas' as the beneficiary of a policy

2. making St. Thomas' the owner of a policy as well as the beneficiary

These two ways have a number of characteristics in common:

• a donor can use either an existing policy or a new one purchased specifically for this purpose;

• both term and permanent policies can be used;

• policies from virtually any company are suitable;

• the proceeds are paid at the death of the insured by the insurer directly to St. Thomas', bypassing the estate. Consequently, the gift is received quickly, in private and usually without being subject to probate fees.

Charitable Gift Annuity (CGA)

The CGA is actually a hybrid of a gift and an income-producing investment. Here's how it works:
A donor gives a sum of money, say $25,000, to St. Thomas'. As part of the arrangement the donor and St. Thomas' sign an annuity agreement. An annuity is a contract to pay a fixed amount of income each year (“annuity” and “annual” come from the same Latin root). Usually annuity payments are calculated to last for the annuitant's lifetime. This means that the agreement guarantees payment of the fixed amount for as long as the donor lives. It's possible to arrange a “joint and survivor” annuity on the lives of two spouses, which extends payments to the death of the second spouse.

St. Thomas' invests the $25,000 and begins making payments to the donor. When the donor dies, St. Thomas' keeps whatever remains of the principal sum as a gift.  No one can know the size of the ultimate gift with certainty. But the formula is this: ultimate gift = (principal sum + investment income) - (payments to donor).

An annuity agreement is irrevocable.   In this respect a charitable annuity is unlike other fixed income-producing investments a donor may have in an account which the donor owns.

A charitable gift annuity will not be the gift of choice for everyone. It will appeal primarily to people who:

• would like to make a gift to St. Thomas' now,

• would like their gift to generate income for them while they are alive

• don't need to preserve the invested money for their heirs.

Lifetime Gifts

Many people think that planned giving is synonymous with deferred giving. This is not always true. A gift made during the donor's lifetime can be a planned gift.

The principal advantage of a lifetime gift is being around to see what the gift accomplishes. Donors can experience great joy and satisfaction from watching their gift bear fruit. Another advantage is the tax benefits that come from charitable gifts. Some people prefer to realize these financial advantages during their life rather than defer them to their estate.

Determination as to whether a particular lifetime gift constitutes as a "planned gift" will be made by St. Thomas' on a case-by-case basis.

When considering the various ways in which to give, having a properly prepared and valid Will or other estate planning documents is a prerequisite to making a bequest or other planned gift. Most people agree that it is wise to consult a lawyer to have the documents properly prepared.  It is a good idea to review one's Will and estate plan every few years, and change it if there has been a material change in one's wishes or circumstances.

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