There are several options acceptable to the Internal Revenue Service for making a planned gift to the Eastern Shore of Virginia Community Foundation.
Bequests are a straightforward way of creating a fund. Your client can designate a specific amount, a percentage of his estate or the residue and remainder of it. Through the type of fund established your client can support specific organizations, address general charitable causes, help students with scholarships or benefit an array of nonprofit needs.
The staff of ESVCF can help with suggested bequest language. Also a Declaration of Intent to Establish a Fund with the Eastern Shore of Virginia Community Foundation is normally utilized. This is a three-party agreement between the donor, ESVCF and the Hampton Roads Community Foundation setting forth the type of fund the donor wishes to create. It can be amended very simply without the need for a will revision.
Charitable Gift Annuities
The Charitable Gift Annuities option is available if your client is 60 years of age or older and wishes to make a charitable gift and also to receive a guaranteed stream of income. Your client may transfer cash or securities to the Hampton Roads Community Foundation, which administers ESVCF’s capital assets, in exchange for a fixed annuity based on rates set by the American Council on Gift Annuities.
Many people now are reaching the age when they can tap into Individual Retirement Accounts and other retirement funds. Often a portion of these assets will remain after their lifetimes. If your client plans to pass these retirement assets on to anyone but his spouse, the assets may be subject to significant taxation. Utilizing a fund within ESVCF as the successor beneficiary to a spouse for those remaining assets removes the assets from the estate for tax purposes.
Whether your client decides to support specific nonprofit organizations or to create a scholarship to help students, ESVCF will provide ongoing stewardship to ensure your client’s wishes are fulfilled.
Charitable Lead Trusts
Often described as the reverse of a Charitable Remainder Trust, a Charitable Lead Trust distributes income to a charitable fund for a period of years or throughout the clients lifetime. Then the assets return to your client or, more typically, to surviving family members. The result is gift and estate tax savings. If planned correctly, a Charitable Lead Trust will allow your client to make a significant gift to charity and transfer assets to family members with reduced or no gift and estate taxes.
Charitable Remainder Trusts
A Charitable Remainder Trust permits your client to make an irrevocable gift but to continue to receive income on the gifted assets. Moreover, if appreciated assets are used to fund the trust, your client will not be subject to capital gains taxes. Your client will also be entitled to an income tax charitable deduction.
There are two types of Charitable Remainder Trusts: Unitrusts and Annuity Trusts. In both cases, the term may be for life or a period of years up to a maximum of 20 years. A minimum annual percentage payout is required.
ESVCF offers a great deal of flexibility for Charitable Remainder Trusts. The Foundation can provide a list of financial organizations that can serve as trustee. You can use trust assets to establish a fund that will support specific organizations, general charitable causes or create scholarship programs. Your client’s fund will receive the assets at the end of the trust term for the fund’s charitable purposes.
Because of ESVCF’s affiliate relationship with the Hampton Roads Community Foundation, planned gifts normally require the naming of both ESVCF and the Hampton Roads Community Foundation in planned gift documents.