Planned Giving

Planned Gifts are specially designed to help you meet your own financial and family obligations while supporting the mission of the Lakes Region Humane Society. These gifts have the potential to give you special income and/or tax advantages. A planned gift can play a valuable role in strengthening your long-term financial plans while enabling you to leave a lasting legacy.

Bequests can help LRHS in a number of ways – from providing medical care and nourishment to the animals, to funding community outreach and humane education initiatives.

Endowment Fund

On January 26, 2022, Dr. Peter Gray donated $25,000 for the purpose of creating an endowment fund for LRHS in memory of his late wife, Ellen. We now have approximately $51,000 in our new endowment fund and we are excited to build it into something substantial enough that the interest earned from the principal in the fund will aid in our operating costs and assist us in obtaining financial stability in perpetuity. Donations made toward the endowment fund are restricted and will remain in the fund, untouched, while the principal grows.

Required Minimum Distribution for IRA

IRA account owners who are required to take minimum distributions from their IRA accounts may find tax advantages in donating their IRA withdrawals to charity. Transferring an IRA distribution to a charity may allow retirees to avoid paying income tax on the amount withdrawn, and these qualified charitable distributions can be used to satisfy IRA required minimum distributions. In certain circumstances, qualifying distributions may be made by individuals age 70 1/2 and older in amounts of up to $100,000 per year. Please check with your tax advisor to ensure that this is a good option before proceeding with any tax favored giving strategies.

Beneficiary on Account

Beneficiary on Account is another way you can support the LRHS. An easy way to make a gift is to designate Lakes Region Humane Society as a beneficiary on a bank account or IRA. These are called Transfer on Death or Payable on Death forms for bank accounts. By establishing a beneficiary, the accounts are also removed from probate.

Life Insurance Policies

If you have life insurance policies that you bought years ago for reasons that no longer apply, consider donating their value to LRHS.

Benefits include:

  • Cost of a gift of life insurance is small compared to the leveraged benefit of the face amount of the policy.
  • The cash value of your policy may qualify for an immediate income tax charitable deduction.
  • You will have the potential to make a significant and lasting impact to a program of your choosing.

Charitable Bequests

Charitable Bequests allow you to make a gift to the shelter in one of three different ways: specific bequest, percentage bequest, and residuary bequest. You can choose to make the gift unrestricted, restricted, in honor or memory of, or as an endowed gift.

FAQ’s Regarding Planned Giving – Compliments of Thrivent Financial Group

1. Do I need a will?
Most likely. Without one, state laws determine who will receive your assets and manage your estate. As a result, the state may not include all of the persons or charities you would like to benefit. A will allows you to appoint a guardian for your minor children, choose a representative to carry out your wishes, and determine the final destination of your assets.  Making a charitable bequest (i.e., giving assets to charity through a will or living trust) is the simplest way to make a planned gift. The donor states in his or her will the amount or percentage of assets that will pass to a designated charity. Some people may wish to designate their church or favorite charity as the “residual beneficiary” of their estate. After they have designated certain amounts to children, friends and charities, they may wish to name a charity as the residual beneficiary to receive the balance of their estate after all other distributions have been made.

2. What is planned giving?
“Planned giving” means mapping out a plan for making gifts to church and charity. A caring person integrates planned giving into his or her financial strategies during different phases of life. Many individuals consider planned giving when they decide how to transfer their estates to the institutions and people they want to benefit after a lifetime of hard work. In addition to fulfilling their charitable goals and acknowledging their gratefulness donors may receive tax benefits and lifetime incomes through several types of tax-favored plans. Planned giving takes many forms and is tailored to meet the needs and goals of the donor. Each person’s dreams make each gift unique and important.

3. How can life insurance be used to make charitable gifts?
Charitable gifts of life insurance provide an easy way for donors to make charitable contributions with minimal current costs. In many instances, a gift of life insurance involves a small out-of-pocket premium each year, yet produces a significant benefit to a charity.

There are many ways to make a charitable gift of life insurance. First, a donor may give an existing contract to charity. In this case, all ownership rights must be assigned to the charity, and the charity will be named as beneficiary. The donor may receive a tax deduction for the value of the contract when ownership is assigned to the charity. Additionally, the donor may also receive deductions for any future premium payments.

Second, a donor may purchase a new contract naming the charity as beneficiary. If the donor makes an absolute assignment of the contract to the charity, the donor may receive a charitable income tax deduction for each premium payment made on the contract. As long as the charity is the owner of the contract, the proceeds will be excluded from the donor’s estate.1

Finally, a donor may designate a charity as the beneficiary of a life insurance contract that he or she continues to own. Although the donor will not receive an income tax deduction for the gift, he or she will receive a charitable estate tax deduction for the amount of the death benefit passing to charity. Donors can also name a charity as a contingent beneficiary, providing the charity with the death benefit in the event that the primary beneficiary predeceases the donor.

4. Is it possible to give something to charity and still receive an income for life?
Yes. There are a couple of ways to receive a lifetime income stream from a gift to charity.

5. Can I leave my home to charity and continue to live in it during my lifetime?
Yes. Making a gift of a remainder interest in a personal residence, vacation home or farm can provide a donor with income tax benefits from the newly created charitable gift without affecting his or her current income or standard of living. In this arrangement, a donor deeds his or her personal residence, vacation home or farm to charity but, in the deed, reserves a life estate in the property. At the time that the gift is made, the donor may be entitled to a charitable income tax deduction for the present value of the charity’s remainder interest in the property. During his or her lifetime, the donor continues to enjoy the full use and possession of the property. This includes paying taxes on the property as well as other maintenance costs. Upon the death of the donor, the charity takes possession of the property without a probate proceeding.

6. What are the advantages to making a charitable gift during my lifetime?
A donor who is going to make a gift to charity must decide whether to make the gift while living or at death. Making a charitable gift while living may provide several benefits over making a gift at death, including:
• A charitable income tax deduction.
• The removal of future appreciation on the asset from the donor’s estate.
• The option of receiving an annual income stream each year in return for the gift.
• The opportunity for the donor to see his or her gift being put to good use.
In addition, making a lifetime gift removes the value of the gifted asset from the donor’s estate, which may reduce any associated estate tax liability.

7. Can I receive a charitable income tax deduction for making a gift of securities?
Yes, if you itemize deduction on your income taxes. In fact, if your securities (stocks or mutual funds) have appreciated since you first bought them and if you have owned them more than a year, you can gift them to charity saving you the cost of the capital gain tax due.

8. Can I leave a significant gift to charity without depleting my children’s inheritance?
Yes, through the use of “wealth replacement” life insurance. Using this technique, a donor transfers assets to charity. In return, the donor may be entitled to a charitable income tax deduction an—depending on the gift—may receive an annual income stream. These tax savings and income payments may be used to pay the life insurance premium on a contract with a face value equaling the value of the gifted asset. If an irrevocable life insurance trust or adult children hold the life insurance contract, the value of the contract may be excluded from the donor’s estate. Upon the death of the donor, the beneficiaries of the contract can receive the death benefit income-tax and estate-tax free. It is a win-win-win situation for the donor, the charity and the donor’s family.

9. How can I ensure that my assets go to my heirs rather than to the IRS?
There are three places your money and assets can go after your death: To your heirs, a charity or Uncle Sam. By planning carefully, you can control how much goes to whom. You can leave as much as you want to your spouse without paying estate taxes (the marital deduction). In addition, you can ensure that the IRS gets less of your estate by making charitable gifts. The charitable estate tax deduction is unlimited.

If you have a sizable estate, consider how charitable giving can shrink your estate for tax purposes. It provides an opportunity for you to support the causes that are important to you rather than supporting the causes that are important to the U.S. government via the IRS. You do not have a choice about whether to give your estate away, but you do have a choice about who will ultimately receive it.

10. What are the benefits to leaving my qualified retirement plan assets to charity?
Here’s one: If you leave your qualified-plan balance to someone other than your surviving spouse or charity, it could be subject to extreme income and estate taxation. The amount of tax depends on the size of your plan and the marginal income tax bracket of the beneficiary. The reason for this excessive taxation is that Congress intended the plans for retirement, not inheritance.

Many people find that they do not need the retirement income that these plans provide, so they let their plans continue to grow tax-deferred. If you plan to leave your qualified and nonqualified tax-deferred assets, such as nonqualified annuities, to children or others, you may want to examine the potential tax implications. One alternative could be to name a charity as beneficiary of the assets, thereby avoiding all income and estate taxation and providing a benefit to your community.

11. How can I make a large one-time gift to my organization without disrupting others’
interest in annual campaigns?
A large, lump-sum donation can interrupt the flow of donations to annual drives and capital campaigns. As an alternative, one may want to consider making a contribution to an endowment fund. An endowment fund is set up by a charitable organization to receive gifts from multiple donors. Distributions from the fund are taken in a manner that ensure the fund grows and can support the organization’s mission—now and in the future. When endowment distributions are used to support a specific mission of the organization, as opposed to solely supporting the operating fund, annual stewardship is typically not affected. A gift to an endowment fund may qualify for a current income tax deduction and for a gift or estate tax deduction based on the fair market value of the gift.

12. What is a charitable gift annuity?
It’s a private contractual agreement between a donor and a qualified charity that meets the requirements of the state of the donor’s residence. The donor makes a gift of cash or other property to the charity. In return, the donor, or another designated individual, receives a fixed income distribution annually from the charity for the lifetime of the annuitant. Donors who make this type of gift may receive a charitable income tax deduction for the value of the charity’s interest, as long as they itemize deductions on their income tax return.

13. What are the benefits of making a qualified charitable distribution (QCD)?
QCDs let donors rollover money from IRAs directly to charity without having to pay income tax. The amount directed to charity is not included in the donor’s adjusted gross income (AGI), but does count toward their required minimum distribution (RMD). Giving these assets to the endowment versus taking the RMD as income may enable donors to avoid disadvantages that can come with a higher AGI, such as higher Medicare premiums or self-employment or taxes on Social Security benefits. Also, since QCDs are not subject to the limitations on charitable deductions, they may be ideal for those who have either exceeded their maximum deductions for the year or do not itemize.

14. What are the benefits of making a charitable gift through my will?
Charitable bequests (i.e., assets given through a will) may provide substantial tax benefits and may be the most appropriate charitable giving technique for people who are charitably inclined, yet want control of the assets during their lifetime. Donors who make bequests to charities are entitled to a charitable estate tax deduction for the value of the charity’s interest, effectively removing the value of the gifted asset from the donor’s estate. Charitable bequests may be made in many ways. The simplest is to bequest an entire asset (say, for example, a life insurance contract). In return, the donor’s estate will get a deduction for the fair market value of the asset on the date
of death. However, donors may also bequest a partial interest in an asset (such as a gift to a charitable remainder trust). In this case, the donor’s estate will receive a deduction for the present value of the charity’s interest in the asset. No matter which technique is used, the tax advantages to the donor can be significant.