Estate Gifts: Unlock the Benefits of Bequests 

Your fund at the community foundation can be an ideal recipient of estate gifts through a will or trust, or through a beneficiary designation on a qualified retirement plan or life insurance policy.   

Bequests of qualified retirement plans can be extremely tax-efficient. This is because charitable organizations such as the community foundation are tax-exempt. This means the funds flowing directly to a fund at the community foundation from a retirement plan after the client’s death will not be reduced by income tax. This also means the assets will not be subject to estate tax.   

Don’t overlook life insurance, either. Not only are you able to designate a fund at the community foundation as the beneficiary of a life insurance policy, but you also may elect to transfer actual ownership of certain types of policies. For example, when you make an irrevocable assignment of a whole life policy to a fund at the community foundation, a tax-deductible gift of the cash value of the policy occurs at the time of the transfer. A gift like this can ease your income tax burden, especially if the community foundation continues to own the policy and you make annual tax deductible gifts to cover the premiums.    

The community foundation makes it easy for your attorney to draft bequest terms in legal documents, including beneficiary designations of retirement plans and life insurance policies. Please contact our team for the exact language that will ensure alignment with your intentions.   

Keep in mind that even after you have executed estate planning documents or beneficiary designations, in many cases you can update the terms of the fund at the community foundation designated to receive the bequest upon your death. You will love the ease and flexibility and certainly will appreciate the heads up about this technique.