Donors often choose to leave charitable assets upon their deaths. After assuring that their loved ones have been cared for, donors can use a variety of assets, such as pension plans, life insurance or the proceeds from the sale of a house, for charitable purposes.
You can establish or add to a named fund in your will or trust through a bequest. Your gift can be used to accomplish almost any charitable goal:
- Establish a discretionary or field of interest fund to respond to changing community needs
- Leave a family legacy, which allows children to continue their involvement in charitable grant making
- Create an endowment for a particular charity
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 that 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.
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 the 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.
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. If you have further questions about remainder gifts, please contact Ann Bova at 860.229.6018 x302.