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Investing in the Future
Leave a Legacy: Gifts of Real Estate, Bequests, or Insurance
Barbara G. Golden, Esq., OES, Director of Planned Giving
There are several interesting ways to support the Scottish Rite charities through gifts of real estate, bequests in wills, or donations of insurance policies.
With property prices having appreciated substantially over the years, a gift of real estate is a great way to support the Scottish Rite Foundations. If you own property that you acquired many years ago or have held as a rental unit, and if you sell it, you may have to pay capital gains if you have used up all of your exclusion amounts (that is, the $250,000/$500,000 amount you don’t pay tax on under IRS rules). But if you make a gift of that property to a charity, either directly by deed or through a charitable remainder trust, you can avoid or spread out recognition of the gain, and get a tax deduction.
Additionally, if you have an income-producing property that you ultimately want to pass to your children or grandchildren, but you do not currently need the cash flow from the property, you could donate the property to a non-grantor charitable lead trust for a specific term. During the term of that charitable lead trust, the income from the property is paid to the charity of your choice, and the trust manages the property while it is in trust. You reduce your taxable income and get a gift tax deduction (but not a charitable income tax deduction). When the term of the trust is over, the property passes to your children or grandchildren, and the appreciation is not taxed to them.
Another intriguing idea is for a donor to gift his home, subject to a life estate, to the Scottish Rite Foundation, S.J., USA, Inc. in exchange for a charitable gift annuity. The donor and the charity get independent appraisals of the real estate, and an environmental audit of the property. Then, the donor and charity enter into a gift annuity contract, whereby the charity agrees to pay the donor a fixed annuity for his life (and up to one other life). During his lifetime, the donor receives a fixed rate of return from the annuity contract, and he continues to live in his home for his life. The charity and the donor agree for the donor to maintain the property and pay taxes on it. After the donor passes away, the home goes to the charity, which can sell the home and use the funds to support its charitable work. The donor gets a charitable donation for making the gift of property at its fair market value, less the present value of the annuity he gets and the life estate that he retains. The Scottish Rite receives a very nice gift to fund its charitable purposes, and the donor has the satisfaction of knowing that he has helped support the RiteCare Childhood Language Program.
If you are reluctant to give an outright gift because you want to have sufficient financial resources in the future to provide for your families or for your own care, you might want to make a gift to our foundations in your will. This type of gift is known as a “bequest.” By amending your existing will (that is, making a codicil) or by writing a new will, you can name a Scottish Rite Foundation as the beneficiary of a percentage of your estate or of a specific amount of money or property. An attorney can help you draft the will or codicil. Since state laws regarding how to make a will or codicil differ, you need to talk to an attorney in your state to make sure your will or codicil will be valid in that state.
Another gift that you can give now without affecting your current financial position is to designate a local or national Scottish Rite Foundation as the beneficiary of a life insurance policy or a 401(k) plan or IRA. As these gifts take place only after one’s death, they do not reduce your current financial resources. Yet, you have the satisfaction of giving a gift to support a worthwhile cause, such as the RiteCare Childhood Language Program.
You also can donate a life insurance policy to your local or national Scottish Rite Foundation. If you have a whole life policy, for example, you can assign the policy to a Scottish Rite Foundation and get a charitable deduction for the assignment. The Foundation becomes the owner and beneficiary of the policy, and the amount of the policy is removed from your estate. If you continue to pay the premiums of the policy for the charity, you get a charitable deduction for the amount of the premium payments. Yet, you do not have to change your current lifestyle to accomplish your goal. You leave a wonderful legacy to the Scottish Rite Foundation, and you do not adversely affect your financial resources. What an intriguing way to give! A gift of life insurance is also recognized through the Scottish Rite Donor Recognition Program.
If you would like an analysis of a charitable gift annuity, or information on any of our other planned giving ideas, please call Barbara Golden at 1-866-GIVESRF (1-866-448-3773). We will be happy to help you.
Please Note: This information is distributed with the understanding that the authors are not engaged in rendering legal, accounting, or other professional service. If legal advice or other expertise is required, the services of a competent professional should be sought. From: A Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.
*For more about how you can help the rite, please see the "Make a Gift Link" above.*
The Development Team
Barbara G. Golden, Esq., is the team’s Director of Planned Giving and member of Silver Spring No. 66, OES. Barbara is an attorney with experience in tax, corporate, and commercial real estate law. She managed a non-profit legal services organization for several years and has extensive experience in fund-raising, grant writing, and program operations. Contacts: Tel. 202-777-3163; Fax 202-884-0183; or call 1-866-GIVESRF (448-3773) Toll Free; bgolden@scottishrite.org.
Dr. Thomas M. Boles, GC, is the team's Advisor on Philanthropies. A member of the Los Angeles, San Francisco, and Santa Ana Valleys, he has worked extensively in fund-raising for children's programs throughout our Fraternity. Contacts: Tel. 562-691-4227; Fax 562-691-5327; or call 1-800-SRMASON (776-2766) Toll Free; tboles@scottishrite.org.
