Planned Giving Guide: Other Planned Giving
Planned Giving to COTS
Many of us would like to make significant gifts to further the causes in which we believe. But, of necessity, our own economic security and that of our family must come first. That’s why a number of COTS supporters have chosen to make gifts to COTS from assets that will remain after they die. This is called planned giving and can be done through a bequest in your will, by setting up a Charitable Trust, or by designating COTS as a beneficiary of your insurance policy or retirement plan. Planned Giving can also benefit your heirs by reducing the amount of taxes they must pay on your estate.
If the total value of your estate (i.e., the gross estate) including all personal property, bank accounts, investments, real estate, life insurance death benefits, retirement accounts, ownership in a business and all other assets, exceeds one million dollars (increasing to $1.5 million in 2004), it will be subject to an estate tax. The effective estate tax rates start at 41% and can be as high as 55%.
Any assets left to a qualified charitable organization like COTS are deducted from the donor’s estate before the federal estate tax is calculated. Therefore, if you are in the highest tax bracket, a $10,000 bequest to COTS can save as much as $5,500 in estate taxes.
Giving a portion of your estate to charity may in some cases reduce the total amount distributed to your heirs. However, you will be maintaining control over how your assets are used.
The Many Ways of Planned Giving:
I. Including COTS in Your Will
One of the simplest ways of making a gift to COTS is through a bequest. A bequest can also benefit your survivors by reducing the tax on your estate. If you are considering naming COTS in your will, you should consult a qualified attorney. Here is a general overview.
Types of Bequests:
The different types of bequests are: Specific Bequests, Residuary Bequests, and Contingent Bequests.
A Specific Bequest is an outright gift of money, stocks or bonds, land, tangible personal property or other assets. The suggested wording for a specific bequest is:
I give, devise, and bequeath to the Committee on Temporary Shelter, a non-profit charitable organization with offices in Burlington, Vermont, the sum of $ ____________(or describe any real or personal property), to be used or disposed of as its Board of Directors in its sole discretion deems appropriate.
In a Residuary Bequest, the donor leaves all or a part of the balance of the estate to a beneficiary after all of the specific bequests have been satisfied. The suggested wording for a residuary bequest is:
I give, devise, and bequeath to the Committee on Temporary Shelter, a non-profit charitable organization with offices in Burlington Vermont, all (or _______%) of the rest, residue and remainder of my estate, to be used or disposed of as its Board of Directors in its sole discretion deems appropriate.
A Contingent Bequest provides for the disposition of the estate if one or more of the named beneficiaries fail to survive the donor. It can be used in conjunction with a specific bequest or a residuary bequest. Suggested wording for a contingent bequest:
If any of the above-named beneficiaries should predecease me, I hereby bequeath his or her share to the Committee on Temporary Shelter, a non-profit charitable organization with offices in Burlington, Vermont, to be used or disposed of, as its Board of Directors in its sole discretion deems appropriate.
I want to include COTS in my will. How do I proceed?
It is essential that anyone considering his or her estate plan seek the advice of a competent attorney. If you are considering naming COTS in your will, your attorney can use the appropriate suggested language given above. We also recommend that you contact COTS to discuss your plans.
II. Using retirement accounts or life insurance policies to benefit COTS:
Donors with no children or living heirs may choose to name COTS as the beneficiary of their retirement accounts or life insurance policies. In other cases, naming COTS as a beneficiary of these assets can reduce estate taxes for your heirs if your estate exceeds one million dollars (increasing to $1.5 million in 2004). If you have a life insurance policy with a permanent cash value, signing ownership of the policy over to COTS could mean an immediate income tax deduction.
To name COTS as the primary or secondary beneficiary of a retirement plan account, simply obtain a ‘change of beneficiary form’ from your employer or plan administrator. Similar paperwork is involved in changing the beneficiary or assigning the ownership of your life insurance policy. You’ll find more information about these strategies on COTS web site: cotsonline.org. We also recommend you talk with your financial planner or insurance agent.
Charitable Remainder Trusts and Charitable Lead Trusts
Charitable Trusts are an excellent option for donors who want to make a contribution to COTS while still maintaining income for themselves or a relative. There can also be tax advantages.
Through a Charitable Remainder Trust, the donor places assets in a Trust and directs the income from that trust to himself and/or other beneficiaries for a certain number of years – up to 20 years maximum or the life of one or more of the people named. At the end of that time, whatever is left in the trust (the “remainder”) goes to COTS. The income from the trust can be paid out at a fixed rate or can be paid at a variable rate based on the annual value of the Trust.
A Charitable Lead Trust essentially reverses the process. The donor places assets in a trust for a specific period of time and directs the income from the trust to COTS. At the end of the trust period, the property is returned to the donor or given to family members or other loved ones.
Charitable Trusts are complex and there are many variations. Talk to a qualified attorney to learn more about these options and determine what is best for you and your family.
There are other options not discussed here, including Life Income Plans, Gifts of Real Estate, Living Trusts and Gift Annuities. For more information on these giving options, please call COTS and an attorney who is experienced in setting up such plans.
For more information, contact:
Kurt Reichelt at COTS
179 S Winooski Avenue
PO Box 1616
Burlington, VT 05402
(802) 864-7402 ext. 107
reichelt-at-cotsonline.org 
Neither the author, the publisher, nor COTS is engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of an attorney or other professional advisor should be obtained. The purpose of this publication is to provide information of a general character only. Advice from legal counsel should be sought when considering these types of gifts.
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