Leaving a Legacy through Testamentary Gifts
By Sarah Butters, Esq.*
In these difficult economic times, gifting to your favorite charities may be difficult or even anxiety provoking. Many of us have seen our portfolios shrink and our investment income decline. Leaving a legacy through testamentary gifts, however, is a great way to show your continued support for your favorite charities while ensuring your assets are available for your needs during your lifetime.
Testamentary gifts are, quite simply, gifts that are not payable to the beneficiary until the donor's death. Testamentary gifts come in many forms and most are revocable, meaning the donor can change the amount and designee at any time. Some of the most common testamentary charitable gifts are:
- Wills and Trusts: The most common testamentary gift is a specific gift of cash or assets through a last will and testament or living trust. Charities welcome gifts of cash, but check with your favored charity before gifting certain assets, like cars and real estate. These assets can carry with them liability risks, so some charities have policies that prevent them from accepting these types of gifts.
- Pay-on-Death Accounts: Recent case law makes it clear that an individual can designate a charity as the beneficiary of a bank or investment account. And, because these accounts pay to the charity upon the donor's death, they are not caught up in the probate court process, allowing the charity to make immediate use of the gift.
- Life Insurance: Designating a charity as the beneficiary of life insurance is another great way to ensure that the your gift to a charity is not tied up in the probate process. Further it is a great way to provide for the payment of a charitable pledge that has not been satisfied in full during your lifetime. But please be sure to let the charity know you have designated them so the policy can be promptly collected at your death.
- Retirement Plans (IRA, 401(k), Keough, etc.): Retirement accounts typically contain assets that have significant tax-deferred gains. For this reason, designating a charity as the beneficiary of a retirement account is a great way to get the biggest bang for your buck. But please be sure to check with your plan's administrator to determine if charities are permissible designees to your particular account, because some plans have restrictions on who you may designate as a beneficiary.
If you would like to make a testamentary gift to the Tallahassee Museum, please consult with your financial or legal advisors for assistance. And please let us know if you have included us in your estate plans so we can recognize you as a Legacy Society member.
*Sarah Butters is a member of the Private Wealth Services section of the law firm of Holland & Knight LLP. Her practice focuses on estate planning, probate and charitable organizations. She is also a member of the Tallahassee Museum's Board of Trustees. She can be reached at sarah.butters@hklaw.com or 850-425-5648.
|
 |
|||||
|
||||||
