If you have a social media account such as Facebook or Twitter, there is no doubt you are familiar with the fundraising phenomenon known as the #IceBucketChallenge. The goal of the challenge is to support research and awareness of Amyotrophic Lateral Sclerosis (ALS), often referred to as “Lou Gehrig’s Disease,” which is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord.
The idea is simple: donate at least $10 to the ALS Association, post a video to the internet of yourself getting drenched by a bucket of ice water, and challenge three others to do the same. This idea has gone viral and has swept the nation: ordinary folks, famous athletes such as Aaron Rodgers and Sydney Crosby, celebrities such as Gwen Stefani and Oprah Winfrey, and governors such as Bobby Jindal and Nikki Haley, have all taken the “plunge.” Even 86-year-old Ethel Kennedy poured a bucket of ice cold water on her head for the cause!
It may sound goofy, but numbers do not lie: in the few weeks from July 29, 2014 through August 19, 2014, the ALS Association raised $22.9 Million compared to only $1.9 Million over the same period last year. Regardless of what any critics might say, this fundraiser has been nothing short of sensational.
While I think everyone should participate in the #IceBucketChallenge (my entire family has done it, including my four-year-old son), there are of course many other ways that you can benefit your favorite charitable causes. Below are the common ways you can leave a legacy by making a charitable gift through your estate plan. (The text is taken from a brochure I wrote for Meals on Wheels of the Monterey Peninsula about planned giving. Contact Meals on Wheels if you would like a copy of the full brochure.)
Traditional Planned Giving Strategies
• Cash Bequest
Leave a specific cash amount or percentage of your estate to one or more charities in your will or trust.
• Bequest of Property
A bequest of specific property through your will or trust ensures that your favorite charity receives specific assets such as securities or real estate that the charity can sell, using the proceeds toward its charitable mission.
• Retirement Plan
You can also designate your favorite charity as the beneficiary of the remainder of your IRA, Keogh, tax-sheltered annuity, qualified pension or profit-sharing plan upon death.
• Contingent Bequest
Your favorite charity is given a bequest only in the event of the death of other beneficiaries, such as your children and grandchildren.
Other Planned Gifts
When outright gifts are not practical, you might consider one of the following options to help you accomplish your goals. Giving strategies such as the ones listed below offer numerous tax advantages and are valuable tools in estate and financial planning. Your attorney, accountant or financial planner will know how best to design a giving strategy that best meets your needs.
The Charitable Reminder Trust – If you have a highly appreciated asset that you would like to exchange for a guaranteed stream of income but are concerned about having to pay exorbitant Capital Gains Taxes, consider creating a Charitable Remainder Trust. During your life, you will obtain an Income Tax deduction, you will be able to defer Capital Gains Tax, and you will be able to obtain a guaranteed stream of income for life. At death, your favorite charity will be entitled to the remainder.
The Charitable Lead Trust – A Charitable Lead Trust is the reverse of a Charitable Remainder Trust and offers many of the same benefits such as deferral of Capital Gains Tax and a charitable deduction on your tax return. You transfer highly appreciated assets to the Charitable Lead Trust. The Trust pays your favorite charity a stream of income for a certain period of time. After that period of time expires, the remainder of the Trust assets is either returned to you or paid to your beneficiaries.
Remainder Interests – (Real Estate) You can donate a remainder interest in your house or other real estate, and retain lifetime use of the property while living. You will get a current income tax deduction for the value of the remainder interest donated. After your death, proceeds from the sale of the property that you donated come to your favorite charity.
KRASA LAW is located at 704-D Forest Avenue, PG, and Kyle may be reached at 831-920-0205.
This article is for general information only. Reading this article does not establish an attorney-client relationship. You should consult a qualified attorney who is licensed to practice law in your community before acting on any of the information presented in this article.