Charitable Bequest Plan
Continue a lifetime of giving after your death
The Charitable Bequest Plan enables donors to:
Delay gifting their assets to charity until they no longer need them
Continue supporting their local church and other charities after they pass away
Simplify their estate by supporting multiple charities with one bequest to Anabaptist Foundation
Ensure their charitable contribution plans are carried out after they pass away
Revise their gift decisions without changing their will
Reemphasize their stewardship values to their children after they pass away
All of your life you have supported your church and other charities. Often you wished you could do more but were afraid that if you made a substantial gift, you might end up needing those funds as you grow older.
Is it possible to keep your assets until you no longer need them, then make a gift to your church and the charities you supported during your life?
Establishing a Charitable Bequest Plan through Anabaptist Foundation is an easy way to support your church and other charities in the future, without affecting your cash flow during your lifetime. In addition, it is a way to pass on your stewardship values to your children, while helping to build God’s kingdom.
What is a Charitable Bequest?
A charitable bequest is simple – it is a distribution of any type of property through a will to a charitable organization. Donors can do this by indicating in their will or living trust that a portion of their assets, including cash, shares of stock and mutual funds, or real estate, should be left as a bequest to their church, or to the charities which they supported during their lifetime.
How does a Charitable Bequest work?
If a bequest is made through a will, the gift will be distributed through probate court proceedings. If a donor makes a bequest through a living trust, the gift will be made by the donor’s trustee. And if the estate or assets are subject to estate tax, a charitable bequest will likely reduce a donor’s tax liability. Usually, no income tax is generated by a bequest unless the gift is made from an asset on which the donor paid no taxes during his or her lifetime, such as IRA, 401K, or Keogh retirement accounts. Because appreciated assets take on a new cost basis at the donor’s death, it is likely that no capital gains tax will be incurred when a bequest is distributed.
Are all Bequests alike?
No. There are different kinds of bequests, such as a:
- Gift of a percentage of the donor’s estate
- Gift of a specific asset
- Gift of the residue of the donor’s estate
Each type of bequest requires specific testamentary language in a will or trust to ensure that the donor’s final wishes are carried out as the donor planned. Donors must name the recipients accurately. Further, donors may restrict their bequests to be used in specific programs, or to be used for limited purposes by the recipient charitable organizations. Any such restrictions must be made at the time of the bequest. A summary of the common types of bequests made to Anabaptist Foundation includes:
Donors may specify an outright gift of cash, securities, real estate, or tangible personal property to go to charity. Donors may consider giving a percentage of their total estate rather than a fixed-dollar amount, since the values of assets change with time. Donors making outright bequests to Anabaptist Foundation often use language such as: I give, devise and bequeath to Anabaptist Foundation, a not-for-profit organization organized under the laws of the Commonwealth of Pennsylvania, with headquarters at 55 Whisper Creek Drive, Lewisburg, PA 17837, EIN 75-3187397, property described herein the sum of $______ , or ___% of my estate for its general purposes (or donors may designate a specific purpose).
Donors may designate specific property, such as certain shares of stock, real estate or other specific assets to go to a charitable organization. Donors making specific bequests to Anabaptist Foundation often use language such as: I give, devise and bequeath to Anabaptist Foundation, a not-for-profit organization organized under the laws of the Commonwealth of Pennsylvania, with headquarters at 55 Whisper Creek Drive, Lewisburg, PA 17837, EIN 75-3187397, property described herein to be used for its general purposes (or donors may designate a specific purpose).
Donors may make specified bequests to their heirs, after which the residue, or balance remaining in the estate goes to charity, whatever dollar amount that may be. Donors making residual bequests to Anabaptist Foundation often use language such as: I give, devise and bequeath to Anabaptist Foundation, a not-for-profit organization organized under the laws of the Commonwealth of Pennsylvania, with headquarters at 55 Whisper Creek Drive, Lewisburg, PA 17837, EIN 75-3187397, all the rest, residue, and remainder of my estate, to be used for its general purposes (or donors may designate a specific purpose).
Donors have a scriptural obligation to provide for dependent family members (I Timothy 5:8) and may also wish to provide for others close to them.
Donors can make bequests to charity which are contingent upon other events occurring. For example, a donor may wish to make a charitable bequest which is contingent on the donor’s spouse predeceasing the donor. Donors making contingent bequests to Anabaptist Foundation often use language such as: I give, devise and bequeath the residue of my estate to [dependent] if he/she survives me. If [dependent] does not survive me, I give, devise, and bequeath to Anabaptist Foundation, a not-for-profit organization organized under the laws of the Commonwealth of Pennsylvania, with headquarters at 55 Whisper Creek Drive, Lewisburg, PA 17837, EIN 75-3187397, all the rest, residue, and remainder of my estate, to be used for its general purposes (or donors may designate a specific purpose).
Donors making a restricted bequest may wish to add language such as: If at any time in the judgment of the trustees of Anabaptist Foundation, it is impossible or impractical to carry out exactly the designated purpose, they shall determine an alternate purpose closest to the designated purpose.
Does it matter what kind of assets I donate through a Charitable Bequest to Anabaptist Foundation?
In addition to cash, a donor’s estate may include shares of stock and mutual funds, real estate, and qualified retirement plans, such as IRA or 401(K) accounts. If donors plan to give part of their estate to their children, they may consider giving appreciated stock and appreciated real property to them, because these appreciated assets receive a “step-up” in basis upon the donor’s death. The donor’s children may sell such assets immediately and pay little or no tax. This leaves the donor’s cash assets available to donate to charity as a bequest.
Can I make a Charitable Bequest by naming Anabaptist Foundation as a beneficiary?
Yes. Certain assets are transferred outside of a will or trust. These assets require the donor to name a beneficiary by completing a Beneficiary Designation Form. To make a bequest of such assets, donors should contact the company or entity from which they purchased the assets. For example:
Bequest of an IRA
A retirement asset, such as an IRA account, makes an excellent bequest to charity. If an IRA were given to a donor’s family, much of its value would be depleted through income taxes. By designating Anabaptist Foundation as the beneficiary of all or part of an IRA, the full value of the IRA gift is transferred tax- free, and the donor’s estate receives a charitable deduction. Further, if a donor wishes to leave an IRA to his/her spouse, the donor may also designate a charity as the secondary beneficiary of the IRA account. Donors should contact their IRA or retirement account custodian to obtain a Beneficiary Designation Form.
How do I make a Charitable Bequest through Anabaptist Foundation?
Making a bequest to Anabaptist Foundation through a will or living trust is a simple process. The Foundation is not permitted to draft legal documents for you, but your attorney will know the proper legal language to make bequests through Anabaptist Foundation. Donors should confer with their attorney to ensure that their desired bequests are included in a will or trust.
How do I make a Charitable Bequest Plan through Anabaptist Foundation to recommend which charities I wish to support?
Anabaptist Foundation will supply forms on which donors may recommend which charities should be supported through their Charitable Bequest Plan. Assets contributed through a Charitable Bequest do not benefit the Foundation. IRS requires the Foundation to be the legal custodian of the funds until they are properly distributed to charities. Donors can list churches, Christian schools, or other charities that they wish to support. Donors may use either a dollar amount, a fixed percentage (such as a 10% tithe on the entire estate), or all that remains after specific bequests have been met. Donors may modify their Charitable Bequest Plan at any time by contacting Anabaptist Foundation, without incurring the expense of changing their will. Anabaptist Foundation keeps the donor’s most recent Charitable Bequest Plan on file.
How is my Charitable Bequest processed when I pass away?
When a donor’s estate is settled upon death, the donor’s executor will simply make one charitable bequest to Anabaptist Foundation. In accordance with the donor’s Charitable Bequest Plan, Anabaptist Foundation then oversees the distribution of assets to approved charities recommended by the donor.
What does it cost to make a Charitable Bequest Plan through Anabaptist Foundation?
Anabaptist Foundation assesses a service fee of ¾ of one percent (0.75%) of each incoming bequest, with a $25.00 minimum, which is deducted at the time the funds are distributed. With gifts of non-cash assets (such as real estate or stock) there may be additional fees to cover our costs to liquidate the assets. There are no ongoing maintenance fees, nor are donors required to make any gifts to the Foundation itself.
How do I get started to make a Charitable Bequest Plan through Anabaptist Foundation?
Contact Anabaptist Foundation for a Charitable Bequest Plan Memorandum of Understanding and a Charitable Bequests Recommendation Form for you to list how you recommend your assets be distributed to charity. After these documents are signed and completed, we will keep them on file. By requesting information about making a Charitable Bequest Plan, you are not under any obligation to make a gift.
This information has been prepared for educational purposes only. It is not legal advice, nor a legal opinion on any specific matters. Please consult your tax advisor.