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Charitable Bequests
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A charitable bequest is gift given to your parish or school through
one’s will. Charitable bequests can include anything of any value, such
as cash, stock certificates, IRAs, life insurance, jewelry, real estate,
antique furniture, etc. They are simplest way for people to remember those
aspects of the Church that have impacted their lives the most. “Through a
bequest,” according to Debra Ashton in The Complete Guide to Planned Giving,
“individuals both of great wealth and of modest means can help to preserve
or to create for the enjoyment of future generations an institution, a way
of life, or an ideal which has had special meaning for them” (p. 216).
Ashton estimates that 85% of all planned gifts come through bequests.
Example: Bill and Mary Swanson have been
members of St. Patrick Parish for forty years. They recently met with their
attorney to prepare their will and do some basic estate planning. Prior to
the meeting the Swanson’s discussed together which charitable organizations
have been the most meaningful to them during their marriage and which
deserved to be remembered with a bequest in their will. St. Patrick – where
they were married, where their children were baptized, received first
Reconciliation, first Eucharist, Confirmation, and where they experienced a loving community – came
to mind first. They decided to include the following wording in their will:
"With thanksgiving for the faith we have
received as members of St. Patrick, (city), Illinois, we bequeath the
residuum of our estate to St. Patrick, after our outstanding obligations and
family bequests are paid." (Note: Please contact your attorney for various
options of wording your bequest)
Gifts of Appreciated Stock
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A very popular way to make a gift to your parish or school is
through appreciated stock. This is true for several reasons: 1) stock gifts
typically have less impact on the monthly budget; 2) you can deduct the fair
market value of stock not what you paid for it; and 3) neither you nor the
parish or school pays capital gains tax.
Example: Jim King is a member of St.
Thomas parish. In December he received a brochure from the parish
encouraging an end-of-year gift. He wants to help his parish, especially
with their building drive. Part of his stock portfolio includes shares of
Microsoft which have greatly appreciated over the last several years. He
decides to transfer 75 shares of his stock to the parish account at a local
broker. He pays no capital gains tax, receives a tax deduction for the
current market value of the stock, and makes a larger gift than he could
from his current income.
Life Income Gifts
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Life income gifts are considered "gifts that give twice." This is
because they first pay you and then, upon your death, the balance goes to
your parish or school. The two most common life income gifts are Charitable
Gift Annuities and Charitable Remainder Trusts.
Charitable Gift
Annuities
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What
is a Charitable Gift Annuity?
A Charitable Gift Annuity (CGA) is a contract between you and the
Catholic Foundation for the People of the Diocese of Rockford, in which you
transfer ownership of cash, securities or other assets, and receive a
guaranteed fixed payment for life. Upon your death, the remainder of your
gift is distributed to your parish, school, or other diocesan agency.
What are the current
CGA rates?
The single life rates, determined by the American Council on Gift
Annuities, are as follows (for joint life rates, which are a bit lower,
please contact us):
|
Age |
Rate |
Age |
Rate |
|
65 |
5.7% |
78 |
7.2% |
|
66 |
5.8% |
79 |
7.4% |
|
67 |
5.9% |
80 |
7.6% |
|
68 |
6.0% |
81 |
7.8% |
|
69 |
6.0% |
82 |
8.0% |
|
70 |
6.1% |
83 |
8.3% |
|
71 |
6.2% |
84 |
8.6% |
|
72 |
6.3% |
85 |
8.9% |
|
73 |
6.5% |
86 |
9.2% |
|
74 |
6.6% |
87 |
9.5% |
|
75 |
6.7% |
88 |
9.8% |
|
76 |
6.9% |
89 |
10.1% |
|
77 |
7.0% |
90+ |
10.5% |
ACGA rates effective July 1, 2008; minimum amount: $5,000
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What are some benefits of a CGA?
There are several, including:
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Rates of return that are normally higher than a
bank;
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The satisfaction in knowing that your
stewardship and gift-giving will eventually benefit your parish, school or
diocese.
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Permanent, guaranteed fixed income for life,
backed by the total assets of the Diocese of Rockford.
A charitable income tax deduction upon creation of the gift as determined by
the prevailing federal and state income tax regulations governing the
original gift.
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If appreciated assets such as stock are used to
fund the CGA, part of the capital gain tax is bypassed;
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No investment responsibilities or concerns.
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Can I designate how the
remainder is to be used?
Yes. Your gift can either be designated as an outright gift, or
an endowed gift in the Catholic Foundation. For either choice you can
restrict the gift for specific purposes or designate the gift as
unrestricted to be used at the discretion of the entity receiving it. At
least 50% of the remainder must go to a diocesan organization (parish,
school or agency). The other 50% can be given directly to another charitable
organization that does not provide goods and services contrary to Catholic moral
teachings.
How much will it cost
me to set up a CGA?
Nothing. This is a service provided by the Diocese, thanks to
your generous support of Diocesan Stewardship.
How does the CGA Work?
Click here to see a
sample illustration.
 To
view and/or print this illustration and the application below you may need to
install a viewer that can open and display a document in PDF file format, we
have provided a link to Adobe should you need it. The Acrobat Reader can be
downloaded free of charge.
How do I establish a
CGA?
Fill out the application
or for a confidential, personalized proposal
contact us.
Example: George and Marilyn Murray attend
St. Peter parish. They are both 70 years old and retired. They have a
$10,000 CD maturing and would like to use it to make a gift to the school,
which their children attended. They are not in a position to make an
outright gift because they need the income that the $10,000 produces. They
recently heard about the parish charitable gift annuity program which allows
them to make a gift to the school and receive fixed payments for life. They
each give $5,000 to the Catholic Foundation which will pay them 6.1%, or
$305
per year until they pass away. Upon their death, the funds remaining in
their accounts are transferred to the school.
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Charitable Remainder
Trusts
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Charitable Remainder Trusts (CRTs) are similar to Charitable Gift
Annuities in terms of “giving twice” but differ in several significant ways:
1) they are typically for more affluent donors ($100,000 minimum); 2) they
are not administered by the Catholic Foundation; they require the services
of agents of wealth – an attorney to set up the trust and a bank to
administer it; 3) they are normally one part of sophisticated estate and tax
planning; and 4) they are more flexible in terms of who receives the payment
streams.
Example: Harold and Marie Johnson,
members of St. Joseph’s, are in their late 70s. They are working with a
financial planner to produce an estate plan. Part of their portfolio is
$500,000 worth of Motorola stock which currently pays a 2% dividend. They
would like to make a large gift to their church but they would also like to
supplement their income and help pay for their grandchildren’s education.
They decide to establish a Charitable Remainder Annuity Trust with the
Motorola stock which, for 10 years will pay them a 7% income (approximately
$35,000 per year). After 10 years they would like each of their
grandchildren to split the income four ways until the last one graduates
from high school. When that occurs, the balance of the trust will be given
to St. Joseph’s.
Life Insurance
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There are two common ways you can use life insurance to make a
gift. First, policies for which the original purpose is no longer applicable
(college education for a child who has graduated), can be given to your
parish or school. When you transfer the policy, you receive an immediate tax
deduction. Upon your death, the death benefit of the policy will be given to
the parish. (Note: if the policy is not paid up, the parish or school must
decide whether or not to keep paying the premiums or cash in the policy.)
Second, you can purchase new policies and name your parish or school as
owner and beneficiary of the policy. According to the Practical Guide to
Planned Giving: "If a donor would like to make a large gift on an
installment plan, suggest that he or she talk with a life insurance agent
about purchasing a new policy. By naming your [parish or school] as both
beneficiary and owner of the policy, all the premiums could be claimed as a
charitable deduction. Upon the insured's death, your [parish or school]
would receive an amount equal to the face value of the policy"
(p. 24).
Life Estate Gifts
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A life estate gift allows you to transfer ownership of your home
(or vacation home, co-op, apartment) but retain the right to live in it
until for a period of years or until death. After the period of years or
upon your death your parish or school becomes the owner of the real estate.
Example: Mr. and Mrs. Haines enter into
an irrevocable agreement to deed their home situated near the local nature
center on the condition that they would be able to continue living there for
as long as either of them lived. They would continue to pay all the taxes,
insurance, and other maintenance costs and would receive any income the
property produced. The couple receive favorable federal income tax
considerations at the time of the gift and possible other tax benefits.
You should always contact the Diocese prior to
making a real estate gift. The Diocese has a
Gift Acceptance Policy that it
follows when considering accepting a real estate gift. |
