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Many donors choose to leave charitable assets upon their deaths after they're assured that loved ones have been cared for. A variety of assets, such as pension plans, life insurance or the proceeds from the sale of a house, can be made available for charitable purposes.
The Foundation's legal name is The Greater New Orleans Foundation.
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BEQUESTS
You can establish or add to your named fund in your will or trust through a bequest.Your gift can be used to accomplish almost any charitable goal:
· Establishing a scholarship fund
· Creating an endowment for a particular charity
· Leaving a family legacy, which allows children to continue their involvement in charitable grant making.
This is one of the simplest ways for a donor to give and for a community foundation to receive. Donors giving through bequest or trust have a few easy options available to them. They can designate a gift by amount, by percentage of their estate, and/or make it contingent on specific future events. Donors like to make gifts through bequest or trust because they can be sure that their charitable wishes will be fulfilled with no risk of running out of money or undergoing a change of lifestyle during their lifetime. And, in many cases, donors can receive a substantial reduction in federal estate taxes.
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PENSION PLAN BENEFICIARIES
A retirement plan is one of the best types of assets to transfer to a charity because it produces taxable income. Most assets an heir inherits are free from income tax. However, an heir will pay income tax on disbursements from a decedent's retirement plan such as a profit-sharing plan, Section 401(k) plan or IRA. If you are going to make a charitable bequest, it is usually better to transfer the taxable assets subject to income tax to a tax-exempt charity — such as a community foundation — and to transfer the assets not subject to income tax to heirs.
For a taxable estate over $3 million, the combination of estate and income taxes will frequently exceed 75 percent of the total amount — even more if the generation skipping transfer taxes are triggered. At a cost to your heirs of only 25 percent of the fair market value of this type of assets, you could apply 100 percent of the assets to a named charitable fund to accomplish your specific charitable objectives.
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LIFE INSURANCE BENEFICIARIES
Perhaps you would like to contribute the proceeds of a life insurance policy to help the community, but you are not yet ready to give up ownership of the policy. By naming a community foundation only as beneficiary, you retain ownership of the policy and have access to the cash value as well as the right to change the beneficiary.
If you don’t have liquid assets right now but want to support a favorite charity, a gift of life insurance may be a good option. While you retain ownership of the policy, there is no charitable deduction for the value of the policy when you designate a community foundation as the beneficiary or for subsequent insurance premiums. However, proceeds payable to the community foundation at your death will not be subject to federal estate taxes.
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We encourage you to work with your lawyer or financial advisor as you consider these options. Our staff is experienced in the use of these giving vehicles and is eager to work with you and your advisor in this process.
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CHARITABLE REMAINDER TRUSTS
A community foundation like ours can administer charitable remainder unitrusts and annuity trusts, both of which pay lifetime income to you or other named beneficiaries.
Establishing a trust is simple. Cash or property is transferred to the trust. The income beneficiaries receive annually an amount equal to a fixed percentage of the trust's fair market value (unitrust) or a fixed dollar amount (annuity trust). Upon termination of the trust, the assets are transferred to your named charitable fund to support your individual or personal charitable giving goals.
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CHARITABLE GIFT ANNUITIES
A charitable gift annuity from our community foundation is a way for you to receive a guaranteed income for life and an immediate income-tax deduction while at the same time leaving a legacy to the charitable cause of your choice.
Through a charitable gift annuity, you receive a fixed stream of income for life. After paying the lifetime annuity to you and your spouse, the remaining principal is transferred to your named charitable fund to accomplish your specific charitable goals. Our payments to you are based on your age-the older you are, the higher the rate. If the annuity is for you and your spouse, the calculation is based on your joint ages. If you need the income now you can use our deferred plan and receive the income tax deduction now, but begin receiving payments when you reach a specific age. This is an excellent complement to your existing retirement plan.
The tax advantages of both a current and deferred annuity are two-fold. First, you receive an immediate income tax charitable deduction when you create your annuity. This is based on your age and annuity payout rate. Second, a portion of the payments you receive may be treated either as tax-free return of principal or long-term capital gains. These tax advantages increase the net income you receive.
Our development staff is pleased to provide a free, personalized analysis regarding your charitable gift annuity rate and tax-deduction information. As these giving vehicles are complex and related to other estate planning, we encourage you to work with your lawyer or financial advisor.
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