The following information is considered to be accurate, but is intended for illustrative and educational purposes. It is not meant to replace advice from your attorney or financial advisers. Tax law changes may not be described here which may affect your estate planning. Every estate plan is unique and should be developed with a professional. Nothing in this website constitutes investment or legal advice provided by The Madison Foundation and it shall not be responsible for estate planning or investment decisions, or other losses resulting from use of the information in this website
You can bequeath a gift to the Foundation by designating in your will or trust that a Fund be created or added to, if one exists at the Foundation. Your attorney can create the documentation to be included in your estate planning documents. A gift can take the form of a specific sum or asset, or a percentage of the estate.
A charitable gift annuity is a contract with the Foundation that allows you to provide a charitable gift and secure income for life. In this arrangement, you transfer assets (cash or securities) to the Foundation in return for the Foundation’s commitment to pay a fixed amount of income to you for the remainder of your lifetime. When the the gift annuity terminates at your death, the remaining assets are then contributed to a fund at the Foundation.
A charitable remainder trust (CRT) allows you to establish a trust, receive income for the life of the beneficiaries of the trust, and receive a substantial charitable income tax deduction. The trust pays either a fixed or variable income for named beneficiaries’ lives or for a fixed term, or a combination of the two. When the trust term expires, the remainder is then distributed to a Fund at the Foundation.
The benefits to a CRT:
A charitable lead trust is the opposite of a charitable remainder trust. In the latter, the income is paid to the donor or beneficiaries. With the Charitable Lead Trust, an asset is given to the Foundation which invests it, and pays a sum annually to the donor’s Fund. Eventually, the remaining property is returned to the donor or, more typically, the donor’s children or other loved ones. A tax benefit is derived from this temporary gift.
This gift arrangement can be an ideal way for donors who do not intend to leave real estate to family members to dispose of at death. The gift generates current tax benefits for the donor. You simply deed the property to the Foundation and retain the right to live in the home until death or for a term of years. While living on the property you continue to be responsible for all routine expenses such as maintenance, insurance and property taxes. When the retained life estate ends, the Foundation can use the property or proceeds from the sale of the property for the purpose you designate.
Retirement plans are appropriate gifts to establish a charitable fund. Assets such as IRA rollover accounts, Keogh plans, or 401(k) plans are subject to income taxes and estate taxes. The gift of such assets can avoid these taxes and set up a charitable fund. Retirement plan assets can be contributed directly to The Madison Foundation at death by naming the Foundation as a beneficiary on a beneficiary designation form from your retirement plan administrator. While retirement plan assets may not be transferred directly to any charity during your lifetime, income may be distributed from the plan to the donor and then contributed to the charity. A charitable tax deduction will offset potentially taxable income.
The contribution of a life insurance policy or its proceeds often allows a donor to make a larger gift. There are several different ways you can contribute a life insurance policy as a gift. You may irrevocably name the Foundation as the owner of an existing policy. The Foundation then names itself as the beneficiary of the policy and will receive the death benefit upon your death. You may be able to deduct a calculated value of the policy itself as a charitable gift.