Planned Giving

DISCLAIMER: Note that the content of this webpage is simply informational and is not intended as legal or tax advice. This webpage is by no means complete. It is designed to give general information on some basic charitable gift planning techniques. Each person’s estate plan should be analyzed individually by an estate planning attorney to make sure that the person’s goals are met and that maximum tax advantages are utilized. There is no “one-size fits all” estate plan.

Planned Giving:
One way that artists and art lovers can make sure that the Perry County Council of the Arts (PCCA) will be here to develop and enhance the arts for future generations is through planned giving. Planned giving is a method of supporting non-profits like PCCA which enables philanthropic individuals or Donors to make larger gifts than they could from their income, and which often enables them to realize significant tax advantages.

Planned gifts can take many forms. Planned gifts can utilize very complicated estate and tax planning techniques to maximize the gifts and minimize the tax consequences on the Donor’s Estate, or planned gifts can be made through very straight-forward bequests in a Donor’s Will or Trust. If you would like to make a planned gift to the Perry County Council of the Arts, you should contact your Estate Planning Attorney who can assist you in determining what type of planned gift is right for you.

Basic Categories of Planned Gifts:
Three basic categories of planned gifts include:

Gifts payable upon the Donor’s death.
Gifts that return income or other financial benefits to the Donor or his loved one(s) in return for the contribution.
Outright gifts that use appreciated assets as a substitute for cash.

Common Types of Planned Gifts:
Some relatively common types of planned gifts for you to consider, which can help you get the conversation started with your Estate Planning Attorney are as follows:

Bequest – A Donor makes a provision in his or her Will or Trust directing that a gift be paid to PCCA after the Donor’s death or the death of a loved one of the Donor. Donors can give PCCA a specific amount of money or item of property (a “specific” bequest) or Donors can give a percentage of the balance remaining in their estate after the expenses, taxes and specific bequests have been paid out (a “residual” bequest”). Further, a Donor can tell the PCCA to use his or her bequest for a particular program, project or activity at PCCA (a “restricted” bequest) or a Donor can tell the PCCA to use the bequest at its discretion (an “unrestricted” bequest).

Beneficiary of a Retirement Plan – A Donor can name the PCCA as the beneficiary or successor beneficiary of a retirement plan. Tax-deferred retirement accounts which designate a person or trust as a beneficiary are generally subject to both income taxes (because the original owner never paid tax on the money that was deposited into the retirement account – often called “income in respect of a decedent”) and death taxes such as the PA Inheritance Tax (because the money is passing at the owner’s death). This double taxation can be avoided by naming a non-profit such as the PCCA as the beneficiary of a tax-deferred retirement plan, and leaving different assets (which may have more preferential tax consequences) to family members. The PCCA is a tax-exempt organization, so it can receive the full benefit of your retirement account at your death without having to pay any income or death taxes.

Beneficiary of a Life Insurance Policy – A Donor can name the PCCA as the beneficiary or successor beneficiary of a Life Insurance Policy that the Donor continues to own. Or, a Donor could contribute the ownership of a policy to PCCA, if the Donor is interested in claiming a charitable deduction for income tax purposes on the value of the policy at the time of the transfer.

Charitable Lead Trust – A Donor can set up a Charitable Lead Trust to pay income to the PCCA for a term of years or for the lifetime of the Donor. When the lead trust terminates, the remaining balance in the trust is either returned to the Donor, or is distributed to the Donor’s heirs. Donors whose lead trusts will return the balance of the trust to them may claim a charitable income tax deduction when they make the gift, for the present value of the anticipated payments to the charity. These Donors are, however, still liable for income tax on the annual earnings of the lead trust. Donors whose lead trusts will distribute their remainder to children or other heirs will not receive an income tax deduction, but could gain significant estate and gift tax savings for their loved ones.

Charitable Remainder Trust – A Donor can set up a Charitable Remainder Trust to pay either a percentage of the Trust’s value (a Charitable Remainder Unitrust) or a fixed dollar amount of income (a Charitable Remainder Annuity Trust) to the Donor and/or other beneficiaries designated by the Donor, for life or for a term of years, and then to pay the remaining balance to the PCCA. The Donor may claim a charitable income tax deduction under both Unitrust and Annuity Trust scenarios.

Charitable Gift Annuity – A Donor can make a gift to the PCCA and in return the PCCA can agree to make fixed payments to the Donor and another beneficiary (typically spouse) for life. At the death of the second beneficiary to die, the remaining balance of the annuity is used by the PCCA for the purposes specified by the Donor at the time of the original gift. Donors who have highly appreciated assets often benefit from Charitable Gift Annuities. They give the tax-exempt charity a highly appreciated asset (which if they had sold themselves they would have had to pay considerable capital gains tax on), the charity then sells the highly appreciated asset (without paying capital gains tax because the charity is tax-exempt), the charity then invests the proceeds of the sale and pays income to the Donor from same. The Donor receives a charitable income tax deduction, as well as avoiding the capital gains tax on his highly appreciated asset.

Legal information for Donations and Planned Giving:

Perry County Council of the Arts
A Pennsylvania Non-Profit Corporation
501c(3) tax-exempt organization
PO Box 354, Newport, PA 17074
Telephone: 717-567-7023
Fax: 717-567-7429
EIN: 222646866