Charitable Bequest
A gift of assets through a will or revocable living trust.
What are some benefits of making a charitable bequest?
The bequest allows donors to make a substantial contribution without reducing current income; it operates like a postdated check payable only after death.
The gift is revocable during the grantor's lifetime, providing a hedge against unforeseen events.
There are four different ways to make a charitable bequest: specifying a percentage of the estate, a dollar amount, a specific asset, or a residue of the estate following the satisfaction of other bequests:
"I give, devise and bequeath to Oxfam America, Inc., 262 Causeway Street, Boston, MA 02114, ___________% of my estate OR $________ OR my ___________ property (i.e.: 100 shares of XYZ Corporation) OR all (or part/percentage) of the residue of my estate, including, without limitation, real and personal property."
What are some details and tax issues regarding charitable bequests?
A charitable bequest from a will or Revocable Living Trust is generally deductible for federal estate tax and state inheritance tax purposes. The federal estate tax charitable deduction is unlimited in amount.
Simple wills, leaving everything to a loved one and/or charity are generally used for donors with estates under the Federal Estate Tax threshold (See below for information on the application of the Estate Tax).
Complex wills or Revocable Living Trusts calling for the creation of various types of testamentary trusts are often used to avoid or reduce estate and inheritance taxes at death (see below).
Federal Estate Tax Phase Out
Year: 2001
Exemption: $ 675,000
Maximum Rate: 55%
Year: 2002
Exemption: $ 1,000,000
Maximum Rate: 50%
Year: 2003
Exemption: $ 1,000,000
Maximum Rate: 49%
Year: 2004
Exemption: $ 1,500,000
Maximum Rate: 48%
Year: 2005
Exemption: $ 1,500,000
Maximum Rate: 47%
Year: 2006
Exemption: $ 2,000,000
Maximum Rate: 46%
Year: 2007
Exemption: $ 2,000,000
Maximum Rate: 45%
Year: 2008
Exemption: $ 2,000,000
Maximum Rate: 45%
Year: 2009
Exemption: $ 3,500,000
Maximum Rate: 45%
Year: 2010
Unlimited Estate tax is repealed
Contact our gift planning specialist for more information.