Thank you for supporting shelter pets in need with a gift that will last. If you are interested in making a planned gift, you may learn more about the options available to you below. Please call us at (207) 449-1366 or email email@example.com to talk more about ways you can help. Our federal tax ID is 01-6021200.
Please note these summaries are available for educational and informational purposes only. The contents of this page are not intended to be legal or tax advice. Midcoast Humane strongly advises you to consult your legal, tax, or financial advisor before considering making any planned gifts.
CHARITABLE GIFT PLANNING: AN OVERVIEW
We are pleased to present information to you regarding the various types of immediate and planned gifts that can be made to Midcoast Humane. If you are already a Midcoast Humane supporter, we are very grateful for your ongoing interest and support.
The simplest way to benefit the animals at our shelter is to make an immediate gift of cash or a check. We will utilize your contribution to provide food, shelter, veterinary care, enrichment opportunities and other services for the animals we serve and the families who adopt these animals into loving homes. For some donors, however, gifts other than cash or checks, or gifts that will take effect in the future, are more appropriate. Your assets, your own current or future cash flow needs, and the needs of your loved ones may warrant consideration of a different gift strategy.
We would like to offer some information on a variety of gift options that may work for your particular situation. Gifts other than cash or checks that will take effect immediately may be in the form of securities, real estate, art, vehicles, and other collectibles. Midcoast Humane welcomes a wide variety of immediate gifts, and we will work closely with our donors to effect a smooth transition to ensure that donated assets go to work as quickly as possible to benefit our animals.
Types of charitable gifts that take effect in the future include bequests, transfers on death, beneficiary-designated accounts, gifts of life insurance and retirement plans, several types of charitable trusts and future interests in real estate. These gifts are more complicated and often require the creation of a separate legal instrument, so we encourage you to work with your attorney and financial advisors to ensure that these gifts meet all legal and tax requirements. Midcoast Humane cannot offer legal or tax advice, but your own advisors will be able to work with you to establish the best gift strategy for you and your family.
We hope that you find this information useful. We also hope that it will provide the basis for a conversation with us to determine how your charitable giving plans can benefit, both now and in the future, the nearly 4,000 abandoned, stray and surrendered animals that Midcoast Humane cares for each year. Please contact us at (207) 449-1366 x109 to learn more about planned giving options.
Gifts of Life Insurance
Often, a life insurance purchase ensures that the financial needs of young families are met in the event of an untimely death of the major income producer. Insurance may be used to pay off a mortgage, to provide college tuition, or to meet household expenses. In addition, insurance policies are often used by small businesses to ensure that the company’s ongoing cash needs are met or to retire the company’s debt if the founder dies.
Over time, the original purpose for purchasing the policy does not materialize and the policy becomes less necessary: Children grow up and complete their educations, the family home’s mortgage is paid off and the family has accumulated other financial assets that are available for ongoing expenses, or the small business grows and has retained earnings that provide funds to ensure the continuation of the business. In these situations, it may be advantageous for a donor to transfer a life insurance policy to a favorite charity.
Paid-up life insurance policies are the best to consider donating to charity, because neither the donor nor the charity will be responsible for making future premium payments. The donor receives a tax deduction for the policy in the year that title is transferred. If the policy still has premiums to be paid, the donor will receive an additional charitable tax deduction each year for the premium paid by the donor or paid to the charity so that the charity can pay the premium.
Transferring ownership of the policy may provide an income tax deduction for the donor. If, instead, the owner names the charity the (or a) beneficiary of the policy, the policy remains in the owner’s estate and no immediate tax deduction is available.
You may find that you have a life insurance policy whose original purpose no longer exists. If so, you may wish to transfer its ownership to a charity in order to benefit that charity after your death. You should talk with your insurance agent to ask about the steps necessary to transfer title and, if necessary, arrange to continue making premium payments, on the policy transferred.
Gifts of Securities
Midcoast Humane is able to accept gifts of publicly-held securities, including common and preferred stocks, U.S. Treasury securities, municipal and corporate bonds.
Gifts of securities are advantageous for donors who own assets that have increased in value since their acquisition by the donor. Giving highly-appreciated securities to Midcoast Humane generally enables the donor to transfer the current market value of the securities without recognizing capital gains, or incurring capital gains tax, on those securities. If the donor were, instead, to sell appreciated securities in order to generate cash with which to make a charitable contribution, the sale would trigger the realization of capital gain and the donor would be responsible for paying any tax on those gains. By transferring securities to Midcoast Humane, rather than selling them, the donor is able to make a larger charitable gift than if he or she transfers net sale proceeds after the payment of capital gains tax.
A donor interested in making a securities gift to Midcoast Humane would first contact our Development Office to learn how to make the gift. The Midcoast Humane investment manager would work with the donor and the donor’s broker or financial manager to ensure the efficient transfer to a Midcoast Humane securities account. Securities donated to Midcoast Humane will be sold and the proceeds will be available to benefit our animals.
Gifts of securities are valued in accordance with IRS regulations that establish value based on the date of the completed gift. Midcoast Humane will notify the donor of the value of the gift as soon as the transfer is complete.
For donors who are not able to make a significant gift to Midcoast Humane immediately, a bequest may be the perfect way to provide assistance to our shelters in the future. Many supporters need to maintain their current assets to provide income and economic security for their lifetimes, but they may feel that, after providing for their loved ones in their wills, a bequest to our shelters is an ideal vehicle to support our important work.
A bequest may be in terms of a specific dollar amount or a specific percentage of the estate remaining after payment of debts and other expenses. The language in the will may be as simple as “I give and bequeath the sum of $__________ to Midcoast Humane to be used to support its mission.” If the donor intends, instead, to bequeath a specific percent of the residual estate, the language could read, “I give and bequeath ____% of the residue of my estate to Midcoast Humane, to be used in support of its mission.”
If you wish to allocate your bequest to a specific program or need, we would welcome the opportunity to discuss your wishes with you and your attorney, and to help provide appropriate language for your will. If you wish to allocate a specific type of property in your bequest, such as real estate, art or a vehicle, please contact us to make sure that we are able to accept the specific asset.
Midcoast Humane does not provide estate planning, legal or tax advice and we strongly recommend that you discuss any estate planning matters with your attorney and financial advisors.
Charitable Remainder Trusts
Donors whose financial assets have significant capital gains and low current returns may wish to establish a Charitable Remainder Unitrust (CRUT), or Charitable Remainder Annuity Trust (CRAT). These trusts may be particularly appealing for donors who need reliable periodic payments for themselves or for other beneficiaries that they designate.
A CRAT or CRUT is an irrevocable trust, approved by the IRS, that periodically distributes a specific percentage of the trust’s market value to a beneficiary, either the grantor or another person named by the grantor. Beneficiaries can be sequential, as well, so that, upon the death of the first beneficiary, another person becomes entitled to receive the trust’s payments. At the death of the last beneficiary, the remaining assets in the CRAT or CRUT are the property of one or more charitable entities named in the trust agreement. An alternative is to distribute a percentage of the trust’s value for a specific number of years, rather than until the death(s) of the beneficiary(ies).
A grantor who transfers assets to a CRUT or CRAT may receive a charitable deduction for the transfer, based on the life expectancy(ies) of the beneficiary(ies). The trust may sell the transferred assets, without the donor incurring any capital gains tax, and reinvestment in higher-yielding assets may result in a higher rate of current return. The trust language specifies the percentage to be distributed each period (often each month or quarter).
One distinction between a CRUT and a CRAT is that the CRUT is revalued each year and the percentage payout is applied to each new annual valuation, so payouts will vary from year to year based on the new market value. A CRAT, however, is valued only at the inception of the trust and the payout is determined at the outset and remains constant throughout the term of the trust. Because a CRUT is revalued each year, it may accept additions after its creation.
Both CRUTs and CRATs are excellent vehicle for donors who wish to retain an income stream from financial assets or to benefit other individuals in the near term, but who also want to benefit a favorite charitable cause in the future.
Charitable Lead Trusts
A Charitable Lead Trust is a vehicle that provides benefits to a charitable beneficiary either for a period of years or for the lives of one or more individuals, at the end of which the trust principal reverts to the donor or another non-charitable beneficiary. Charitable Lead Trusts are particularly useful for donors who do not need the income earned by the trust’s assets and who wish to provide for a cherished non-profit by making that income stream available for the non-profit’s use. Often, the donor recognizes that his or her current income levels will not continue indefinitely, and that he or she will need the trust’s income in the future, perhaps on retirement or at the expiration of another income source.
There are several types of Charitable Lead Trusts, each with unique characteristics, and, as a result, the Charitable Lead Trust is more complicated and less popular than either the Charitable Remainder Unitrust or Charitable Remainder Annuity Trust, and less appropriate for many donors. A Charitable Lead Trust is often considered to be the “inverse” of a Charitable Remainder Unitrust or Annuity Trust, in that the charity receives the “lead” income interest before the non-charitable beneficiary receives any income or principal from the trust. The Charitable Lead Trust is not a tax-exempt entity and is subject to tax treatment very different from Charitable Remainder Trusts. Special attention must be paid to meeting the conditions that allow for a tax deduction on income earned and paid out by the Charitable Lead Trust.
The IRS has not provided sample trust agreement forms for Charitable Lead Trusts, as it has for Charitable Remainder Trusts, so it is imperative that the agreement be drafted by someone with expertise with these vehicles. If the Charitable Lead Trust is crafted appropriately, it is an excellent vehicle for a donor who wishes to benefit a charitable beneficiary for a period before the trust’s assets become payable to a non-charitable beneficiary.
Gifts of Real Estate with Retained Interest
Often, supporters of charitable organizations wish to donate real estate to their favored charity, but they also want to be able to continue to live on the property or to derive an income stream from it. A gift of real estate with a retained interest may be an excellent way to benefit a charity in the future without jeopardizing a donor’s present living situation or income stream.
Whether the real estate is a beloved family cottage, a primary residence, an income-producing farm, tract of timberland or an apartment building, the donor may have many reasons for not relinquishing total control over the property. The donor may rely on rental income or crop income for current cash flow needs, or the donor may wish to continue to use the property for his or her own enjoyment for several more years. In any of these cases, it is possible for the donor to transfer the ownership of the property to a non-profit while still retaining rights to its use or its income. The retained rights may be for a period of a specific number of years or it may be for the lifetime of the donor. The retained rights may also be for the lifetime of another person named by the donor.
Gifts of real estate with a retained interest must be structured carefully so that each party’s interests are clearly articulated and protected, each party’s responsibilities (insurance, maintenance, rental management, etc.) are clearly stated, and available charitable tax deductions are preserved. It is imperative that a donor who is considering a gift of real estate consult with his or her attorney and financial advisors to ensure that this type of gift is appropriate for the donor and the donor’s family.
Midcoast Humane should be consulted early in the planning process to ensure that we have the ability and expertise to manage the property’s individual requirements. We may also be unable to accept property that requires any financial support to maintain the property, such as mortgage payments or significant maintenance outlays, or has environmental issues.
Gifts of Retirement Assets
Many people find, as they get older, that they do not need to use all of their retirement assets, such as those in an IRA, 401(k) or 403(b) account, for their own needs, and they determine that a portion of those assets may be available for charitable purposes.
To the extent that your retirement assets exceed your needs, you may be able to make a gift to charity of those excess funds during your lifetime. Alternatively, you may want to designate a favorite charity as the beneficiary of a part of, or the entire balance of, a retirement account on your death.
Lifetime distributions: In general, a distribution from a retirement account during the owner’s lifetime is subject to income tax. But if you are over 70 ½, you may wish to roll over up to $100,000 of your IRA to charity; you will not be taxed on this withdrawal from your IRA account, and the distribution will count towards your required minimum distribution for the year. Other types of retirement accounts are not able to use this strategy, but you may be able to roll over your 401(k), 403(b), SEP or KEOGH plan into an IRA, which would then be available for this distribution.
Distributions on death: Complicated tax laws apply to retirement benefits paid to individual beneficiaries on the death of the plan owner. By naming a charity as a beneficiary of your retirement assets on your death, those assets pass free of estate tax and income tax, ensuring that the entire amount will be available to benefit the charity’s important work.
Naming Midcoast Humane as a beneficiary of your retirement assets may be as simple as completing a beneficiary form, which ensures that you will be able to continue to support a favorite cause after your death. You will want to consult your attorney and financial advisor for advice on whether this approach is appropriate for you.