FOREVER FRIENDS A Planned Giving Guide

Example: Art lost his wife to cancer last year and has decided to throw himself into various activities to keep his mind off his incredible loss. One of those activities is attending events hosted by Helen Woodward Animal Center which allow him and his dog, Xander (who he adopted from the Center), to attend. Art has really come to appreciate the efforts of the Center because of its work with animals helping people and people helping animals.

While Art does not have considerable wealth or cash flow, he would like to help Helen Woodward Animal Center any way he can. Over the years, he has supported the Center with small monetary and in-kind donations, but wanted to do more. After attending a Planned Giving event, held by the Center, he learned about the Pet Bequest Program, where someone leaves money and direction on the care of their pet should the pet outlive the owner. One of the ways to fund the Pet Bequest is by leaving a life insurance death benefit for the benefit of Helen Woodward Animal Center. The other way to fund the Pet Bequest is to give a lump sum gift to Helen Woodward Animal Center when he passes away.

Art had purchased a $35,000 whole life policy 23 years ago so his wife would have some extra money to pay off bills if something happened to him. Over the years, he had diligently paid the $83/month premiums and, because of dividends, the death benefit had grown to more than $51,000 dollars with a surrender value of more than $23,000! Art decided that since he no longer needed to provide the money to his wife, he could donate the policy to Helen Woodward Animal Center in honor of his wife and for the benefit of Xander. After contacting Helen Woodward Animal Center, Art happily became part of the Pet Bequest Program, with little effort on his part. With his gift, he was able to provide a future gift of at least $51,000. Plus, before his death, Helen Woodward Animal Center would be able to use the policy cash values and dividends as they saw fit. Finally, Art received another benefit: he did not have to pay premiums anymore; so, by funding his Pet Bequest program, Art “found” almost $1,000/year more to help animals like Xander have a better life.

While attending a Planned Giving event held by Helen Woodward Animal Center, John learned about Charitable Gift Annuities (CGAs.) which would allow him to use his $100,000 to receive 3-4 times more guaranteed income than what a new CD would provide, and, the bulk of that income will not be taxable each year (until he reaches his “life expectancy.”). Furthermore, John would be able to provide Helen Woodward Animal Center with a tax deductible gift of almost $33,000 as well as have that lifetime income guaranteed by an A-rated multi-billion dollar financial services company such as ING or American National.

Example 2: Scott is a 50-year-old manager who got tired of the market’s volatility a couple years ago and switched some of his funds to cash. He is a consistent donor to Helen Woodward Animal Center and feels strongly about what they do, but feels he needs to take care of his retirement before donating a portion of his assets to them. 

Scott attended one of the annual Planned Giving events held by Helen Woodward Animal Center and learned about CGAs and a few options available to him so that he could provide a gift to the Center, in addition to annual payments to himself. One option was a deferred CGA that would receive approximately $4,800 per year for the rest of his life starting at the age of 70 with a $50,000 deposit. A good portion of that income would not be subject to taxes. 

In the end, Scott joined Helen Woodward’s elite group of donors by giving them almost $10,000.

Sue and Bob Smith (65 years of age) own a beach house in San Diego but live in Orange County. Although they enjoy having the house, it is expensive to maintain and has an appreciated fair market value of $1.5 million and is completely debt free.

The Smiths have been thinking about selling the house, taking the profit and avoiding all the typical maintenance problems. However, the Smith’s basis in the house is $500,000, and they would incur significant capital gains taxes in the sale.

They create the Sue and Bob Charitable Remainder Trust. Their trustee sells the house free of any taxes since the trust is tax-exempt. The trustee reinvests the proceeds into a diversified portfolio. The Smith’s receive a current charitable income tax deduction and an annual income percentage of the fair market value of the trust assets, as revalued annually.

Utilizing a Charitable Remainder Trust, Sue and Bob can create a lifetime income stream and benefit Helen Woodward Animal Center.