Various Options for Planned Gifts

The Cleveland Foundation offers many planned giving options. A planned gift is a charitable donation provided for during your lifetime but not available to the Cleveland Foundation until sometime in the future. Following are descriptions of the various types of planned gifts for you to consider:

Bequest by Will

An outright bequest to the Cleveland Foundation is the simplest means for providing for your community. See an example of Cleveland Foundation Bequest Language.

IRA or Qualified Plan

At death, retirement plan or IRA balances are included when figuring estate and income taxes to your beneficiaries – often up to 85 percent. Funding a charitable bequest with an IRA or retirement plan prevents the bequest from becoming a liability of your estate, and the gift is made with pre-tax dollars.

Charitable Remainder Trust

A charitable remainder trust offers a gift to the Cleveland Foundation without loss of income and provides a current income tax deduction for a future gift. The value of the gift is based on current market value without triggering a taxable capital gain. A charitable remainder trust offers income at a desired percentage without regard to current investment return.

Charitable Lead Trust

Assets transferred to the trust are eventually returned to the donor or, more typically, to the donor’s children. Income is paid to the foundation annually while the assets are in the trust. Such trusts can be created during your lifetime or at death, with significant savings in gift or estate taxes possible because of the “temporary” nature of the gift to the foundation.

Charitable Gift Annuity

A gift annuity is a life annuity for one or two lives, issued by the foundation in exchange for gift property. The foundation guarantees annuity payment to the annuitant(s). The charitable gift annuity offers a charitable tax deduction for the value of the remainder gift. The basis is recovered tax-free over your lifetime, and the foundation receives your capital gift when income need ends.

Life Insurance Policy

Life insurance makes it possible for virtually everyone to make a meaningful gift. Policies that were never used for their original purpose can make excellent gifts when given to the foundation. The donor can deduct the replacement value of the policy. Some people find they can make a much larger gift by purchasing a life insurance policy and naming the foundation as owner and beneficiary.

Comparisons of Planned Gifts

  Bequest Charitable Gift Annuity Charitable Remainder Trust Charitable Lead Trust
Revocable Yes No No No
Minimum Gift Amounts None $10,000 $100,000 $1 million
Appropriate assets that can be used Virtually any Typically cash or marketable assets Virtually any Virtually any
Tax Benefits Possible Estate Income and estate Income and estate Possibly income and estate (depending on how the trust is structured)
Will This Gift Create a Stream of Payments to One or More Individuals? No Yes (at a percentage determined by the age of the recipients) Yes (at a prenegotiated percentage) No (However, this gift does allow for the transfer of property to one or more recipients with possible tax savings.)
Can Additional Gifts Be Made? Yes No Yes (only the unitrust type) Yes (only the unitrust type)
Age Limits to Creating None Payment beneficiaries must be at least 60. Payment beneficiaries must be at least 60. Trust may also be based on a term of years. Calculating ages must be at least 60. Trust may also be based on a fixed term of years.
Fees/Applicable Costs (Other Than Personal Legal Expenses) None None Up to $1,000 for administrative purposes Up to $1,000 for administrative purposes
Philanthropic Outcomes Entire bequest can flow to the nonprofit organization

The entire amount can become a fund at the foundation to be used for your organization or other organizations or for other selected purposes.