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Planned gifts to Habitat for Humanity of Frederick County can come in the form of bequests, donations from retirement plans, and/or proceeds from life insurance policies. Please call Habitat for Humanity of Frederick County at (301) 698-2449, or e-mail us at info@frederickhabitat.org for more information. Bequests Bequests are the most popular type of planned gifts. Anything you leave to Habitat for Humanity of Frederick County will reduce the size of your taxable estate while helping us. You will want to be as clear as possible in describing what you want given to whom. Below are several common ways to make a bequest. Specific bequest. This is a gift of a specific item to a specific beneficiary. An example would be, "I give my golf clubs to my nephew, John." If that specific property has been disposed of before death, the bequest fails and no claim can be made to any other property. In other words, John wouldn’t receive the value of the golf clubs instead. General bequest. This is usually a gift of a stated sum of money. It will not fail, even if there is not sufficient cash to meet the bequest. For example, "I give $50,000 to my daughter, Mary." If there is only $2,500 cash in the estate, other assets must be sold to meet the bequest. Contingent bequest. This is a bequest made on condition that a certain event must occur before distribution to the beneficiary. For example, "I give $50,000 to my son, Joe, provided he enrolls in college before age 21." A contingent bequest is specific in nature and fails if the condition is not met. (A contingent bequest is also appropriate if you want to name a secondary beneficiary, in case the primary beneficiary doesn't survive you.) Residuary bequest. This is a gift of all the "rest, residue and remainder" of your estate after all other bequests, debts and taxes have been paid. For example, you own property worth $500,000, and you intend to give a child $50,000 by specific bequest and leave $450,000 to a spouse through a residuary bequest. If the debts, taxes and expenses are $100,000, there would only be $350,000 left for the surviving spouse. You may prefer to divide your estate according to percentages of the residue rather than specifying dollar amounts, to ensure that your beneficiaries receive the proportions you desire. Any of the previous items can apply in the case of bequests to individual heirs or bequests to charitable organizations. Let Us Know Please let us know if you have designated Habitat of Frederick in you will. We would like to personally thank you for your generosity. If you prefer to remain anonymous, your gift will be kept completely confidential. However, recognition of your gift can encourage others to do the same. Either way,we will honor your wishes, because we appreciate your support immensely. The Gift of Retirement Plan Assets Like many Americans, you are probably aware that the accumulation of assets in your retirement plan is the basis for a financially secure future. To preserve your retirement assets after your lifetime, consider the benefits of using them in a totally different way. Because tax laws often subject retirement plan assets to the highest combined income and estate taxes, charitable donations of these assets may be the most efficient estate planning option. Many techniques can be used to create generous charitable gifts for Habitat For Humanity of Frederick County. A new law allows individuals to donate up to $100,000 from an IRA to a qualified charity, such as Habitat for Humanity of Frederick County. Click here to find out more about this special provision. Assets can also be directed, usually at your death, from retirement plan assets that could otherwise be subject to tax rates of nearly 65 percent. At the same time, you can pass more tax-favored assets to your family. How to Donate Your Retirement Account The simplest way to leave the balance of a retirement account to Habitat is to list us as the beneficiary on the beneficiary form provided by your plan administrator. Never make a beneficiary change, however, before discussing your desires with your professional advisor. For an IRA or Keogh plan you administer personally, notify the custodian in writing and keep a copy with your valuable papers. If you are married, your surviving spouse is entitled by law to receive the entire amount in these qualified plans: money purchase pension, profit-sharing plan, 401(k) plan, stock bonus plan, ESOP or any defined benefit or annuity plan (though not an IRA). In order for the assets to be transferable to Habitat, your spouse must execute a written waiver (even though you may designate a charitable organization as beneficiary on your employer's forms). Your spouse can execute one after your death, if necessary. In that case, the document must also include a qualified disclaimer. If you prefer to make your spouse the primary beneficiary of your retirement account, you can name Habitat as the secondary beneficiary. Perhaps you want your children to benefit from your retirement account, too. In that case, you might designate a specific amount to be paid to Habitat, before the division of the rest among your children. Due to the variety and complexity of retirement plans, you should consult an attorney or tax specialist for a strategy best suited to your situation. How to Donate Stock A stock portfolio is often among the most valuable assets you own, and one that carries substantial capital gain—appreciation in value. The downside to assets that have increased in value over the years is that the federal government is prepared to levy taxes of up to 15 percent on your capital gain from securities. With careful planning, you can reduce or even avoid federal capital gains tax. We can show you how charitable giving may be one of your best defenses against capital gains taxes. As stock prices increase, so do the taxes you owe on the capital gain, which are generally charged at a rate of 15% or 5% if you are in the 10% tax bracket. But when you donate publicly traded stocks held long term (owned for more than one year) to a qualified charitable organization, such as Habitat for Humanity of Frederick County, you avoid all capital gains taxes. Plus, you may take the full fair market value of the stock gift as a charitable deduction on your income taxes. The maximum deduction you may take within a given tax year is 30 percent of your adjusted gross income. If you are unable to take the entire deduction in one year, you may carry the excess deduction forward for five additional years. Even if you own stock you wish to keep in your portfolio, giving us the stock and using cash to buy the same stock through your broker provides the same income tax deduction with a new, higher basis in the stock. If you have stock losses, sell the stock yourself to realize the loss and take the deduction for tax purposes. Then generate a charitable deduction by donating the cash proceeds of the sale to Habitat for Humanity of Frederick County. The Gift of Life Insurance When you first bought a life insurance policy, you probably hoped to ensure the financial stability of your family should something happen to you or your spouse. Have your circumstances changed since then? Use of Beneficiary Clause as a Revocable Gift Arrangement The easiest way to use life insurance for charitable giving is to simply name us as the beneficiary of a policy. Such options are available if you would rather retain ownership of a policy as an asset for your own financial security or that of others. They include: - naming Habitat for Humanity of Frederick County as the only or a partial primary beneficiary of the policy, while you keep the right to change the beneficiary clause as owner of the policy;
- naming us as the contingent successor beneficiary, receiving the death benefits only if a named individual beneficiary predeceases you;
- creating a separate trust named to receive death benefits, with trust terms providing first for financial support of one or more named individuals for specific terms of years or for life, after which the trust terminates and its assets pass to us;
- naming us as the residual beneficiary of an annuity settlement option available under some policies.
There are no current tax benefits to this arrangement because you are not giving away the policy ownership; however, it provides a very generous gift with attractive tax benefits upon your death. The simplest way to use life insurance for charitable giving is to list us as the beneficiary on the beneficiary form provided by your plan administrator. Never make a beneficiary change, however, before discussing your desires with your professional advisor. For an IRA or Keogh plan you administer personally, notify the custodian in writing and keep a copy with your valuable papers. Please call Habitat for Humanity of Frederick County at (301) 698-2449, or e-mail us at info@frederickhabitat.org for more information.
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