Charitable Estate Planning In this section (click to advance): WHAT IS AN ESTATE? WHAT IS ESTATE PLANNING? CHARITABLE GIVING THROUGH YOUR ESTATE PLAN WHY DO PEOPLE GIVE TO CHARITIES? WAYS TO GIVE THROUGH YOUR ESTATE PLAN (PLANNED GIFT) WHAT IS AN ESTATE? Your estate includes all of the tangible and intangible property that you own. Tangible personal property includes those things that are material in nature, like cash, stock, jewelry, antiques, automobiles, boats, planes, land, clothing, art, animals and etc. Intangible personal property includes: patents, copyrights, mineral rights, easements, royalties and etc. WHAT IS ESTATE PLANNING? Estate planning is simply the process of determining and expressing the methods of arranging or re-arranging your property in order to accomplish your objectives. Your estate plan tells society what you want to do with the assets that were entrusted to you during your lifetime and at the time of your death. Three key elements in estate planning are creation, preservation and distribution. We spend our entire lifetime, thanks to the grace of God, creating our estate. We spend many hours preserving that estate through good investing and prudent planning. However, many do not spend enough time on the third key element … the proper distribution of our assets during our lifetime and at the time of our death. CHARITABLE GIVING THROUGH YOUR ESTATE PLAN You can effectively manage and distribute your estate by taking advantage of charitable giving. Charitable giving is nothing more than giving back to God and those in need some of that which God entrusted to us during our lifetime. The Christian Steward makes an orderly disposition of his or her worldly possessions at the time of one’s death. Hence, the good steward has a prudent estate plan in place. WHY DO PEOPLE GIVE TO CHARITIES? It's basically because they want to make a difference. There's an old saying that says nobody is remembered for what they took but instead for what they gave. When it comes to the Church, many realize that God has blessed them with all they have and all they are, so they demonstrate their gratitude by furthering Christ’s Mission at their parish or the diocese through a gift in their estate plan. “Life is a gift, and if we agree to accept it, we must contribute in return. When we fail to contribute, we fail to adequately answer why we are here.” Albert Einstien WAYS TO GIVE THROUGH YOUR ESTATE PLAN (PLANNED GIFT) In this section (click to advance): A. Gifts by Will (Bequests)      1. Specific Bequest      2. Residuary Bequest      3. Contingent Bequest      4. Charitable Remainder Bequest B. Life Income Gifts      1. Gift Annuity      2. Deferred Gift Annuity      3. Charitable Remainder Annuity Trust      4. Charitable Remainder Unitrust          a. Straight Unitrust          b. Net Income Unitrust          c. Net Income Plus Make-up      5. Charitable Remainder Lead Trusts      6. Gifts of Personal Residence or Farm      7. Gifts of Life Insurance A.    Gifts by Will (Bequests) The most common form of a planned gift is a gift made through a donor’s Will (bequest). The bequest takes effect upon the death of the donor and/or another contingent beneficiary. The Federal and State tax laws encourage bequests. Consequently, a bequest is an excellent way to support the Church without taking away from any provision the donor has made for family during one’s lifetime. There are several types of bequests: 1. Specific Bequest - takes the form of an outright gift of money, securities or other property.        2. Residuary Bequest - is received after all other bequests have been made and is composed of the residual assets of the estate. 3. Contingent Bequest - is received only in the event that the person named in the original bequest does not survive the donor.     4. Charitable Remainder Bequest - is established when a donor chooses to deposit assets to a life income program sponsored by the Diocese and/or bank trust department stipulating that income is paid to one or more beneficiaries. Upon the termination of the trust, the assets are distributed to the Diocese for the purpose of general operations or endowment. The Diocese will observe the donor’s intent, i.e. the donor’s parish, a Catholic School, Catholic Charities and etc., in all accepted bequests provided they meet the mission of the Catholic Diocese of Youngstown. B.    Life Income Gifts Life Income Gifts are made by an irrevocable transfer of cash, securities, bonds, or real estate, which are deposited into a specific life income program. Income from the program is paid out to the donor and/or a named beneficiary. Under life income plans, upon the death of the donor and/or other beneficiary, the assets will be used for the general or donor designated purposes of the Church. Life Income Gifts include: 1.    Gift Annuity A Gift Annuity is a contractual agreement between a donor and the Diocese      whereby the Diocese agrees to pay a fixed annual income for life in exchange for money or assets transferred to the Diocese. In return the Diocese agrees to make regular, fixed payments to the donor for the rest of his/her life. The transaction is both the purchase of an annuity and a charitable contribution. At the time of the donor(s) death the balance of remaining is available for use by the Church as designated by the donor, i.e. a parish, Catholic School and etc. The most common form of asset transfer to establish a gift annuity is cash but appreciated property may be given. When appreciated property is transferred for a gift annuity, a portion of the income payment is taxable as capital gains income when received by the donor. The amount of the income tax deduction for making a gift annuity agreement depends on the donor’s age, date of the gift annuity purchase, the donor’s life expectancy, and the number of lives that will benefit from the annuity (two-life maximum). The Diocese will offer the gift annuity rates set by the American Council on Gift Annuities (the industry standard).     Annuities will not be issued to anyone under 50 and for not less than $2,500. Gift annuity agreements shall not be issued for more than two lives, and in the case involving more than one life, shall have a $5,000 minimum. Annuity payments will be offered quarterly, semi-annually and annually. CALL PAT PALOMBO AT (330) 744-8451 TO GET A CONFIDENTIAL PERSONAL PROPOSAL ON A CHARITABLE GIFT ANNUITY ITS FREE!!! 2.    Deferred Gift Annuity A Deferred Gift Annuity represents an excellent retirement plan for most donors as it makes it possible for the donor to receive an immediate income tax deduction, yet defer the receipt of income for a term of years. The donor determines the starting year of the annuity payments. The deferred gift annuity can have the advantages of a tax shelter, because the donor receives a current deduction in high-income earning years yet defers income until the time when the donor may essentially be in a lower income tax bracket. 3.    Charitable Remainder Annuity Trust A Charitable Remainder Annuity Trust is created when a donor irrevocably transfers cash, securities, bonds, real estate or other property to an individually established, invested and managed trust. The trust stipulates that the donor and/or designated beneficiary(ies) will receive a fixed dollar amount payable at least annually, for life or for a term of years up to 20 years. At the death of the donor, or the last income beneficiary, the trust terminates and the value of the trust assets are transferred to the Church. The charitable deduction is dependent upon the age of the beneficiary, the trust’s payout percentage, the fair market value of the gift assets and federal rates at the time of the gift. The trust payout is set at the time the annuity trust is established and remains fixed for the term of the agreement. CALL PAT PALOMBO AT (330) 744-8451 TO GET A PERSONAL PROPOSAL ON A CHARITBLE REMAINDER TRUST … ITS FREE!!! 4.    Charitable Remainder Unitrust A Charitable Remainder Unitrust is established when the donor transfers assets to an individually invested, managed and administered trust. The donor retains a percentage of the trust, revalued annually, for as long as the donor and/or a survivor beneficiary lives or for a fixed term of up to 20 years. Because the trust is established with a charitable remainder beneficiary, the donor becomes eligible for substantial tax benefits. There are three basic types of Charitable Remainder Unitrust as follows: a. Straight Unitrust In this type of trust the donor receives a specified percentage of the trust assets as valued annually regardless of the actual earnings and expenses incurred. b.  Net Income Unitrust Under this type of trust agreement the donor receives the net income earned after expenses, up to a percentage stated in the trust agreement. c.  Net Income Plus Make-up Under this arrangement the donor receives the net income earned after expenses up to a stated percentage as in b above. However, in years where the net income is higher than the stated percentage, the excess is used to make-up deficiencies of prior years. 5.    Charitable Remainder Lead Trusts A Charitable Remainder Lead Trust is established when the donor transfers cash, securities, bonds, real estate or other property to an individually invested, managed and administered trust. During the term of the trust it pays a fixed amount (if it is an annuity lead trust) or a percentage of the trust revalued annually (if it is a lead unitrust) to the Church. When the trust term ends, its remaining principal passes to the donor’s family or heirs named in the trust. Trust growth passes to them tax free. The donor receives an income tax deduction at the time the trust is funded. CALL PAT PALOMBO AT (330) 744-8451 TO GET A PERSONAL PROPOSAL ON A CHARITBLE LEAD TRUST … ITS FREE!!! 6.    Gifts of Personal Residence or Farm A personal residence or farm may be deeded to the Diocese with the donor retaining a life estate, that is, the right to continue to live in the home or on the farm during the donor’s lifetime. When a life estate is retained by the donor, the donor is entitled to a charitable income tax deduction and his/her total estate is reduced in value which in-turn reduces possible estate taxes. The agreement can further stipulate that the spouse may live there for his/her lifetime. The property does not have to be the donor’s primary residence. It can be a vacation or second home. Furthermore, the donor does not have to reside on the property. The donor can also give stock in a co-operative apartment that is used as a residence. 7.    Gifts of Life Insurance A Gift of Life Insurance for the benefit of the Church may take many forms. A donor may give an existing paid-up policy by changing the owner and the beneficiary to a parish, Catholic School, Catholic Charities or other Diocesan Agency. A donor may give a policy on which the donor is still paying premiums and name the Church as irrevocable owner and beneficiary. A donor may name the Church as a second beneficiary sharing the proceeds with another co-beneficiary. A donor may name the Church as a second beneficiary and the proceeds will become a charitable gift if the first beneficiary has died. CALL PAT PALOMBO AT (330) 744-8451 TO DISCUSS GIFTS OF LIFE INSURANCE OR GIFTS OF A PERSONAL RESIDENCE … IT’S  FREE!!!!! Return to Office of Development & Stewardship

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