ESTATE PLANNING
Leaving a Legacy
What is Estate Planning?
Estate planning is the process of anticipating and arranging the disposal of an estate.
Your estate consists of the following:
- Bank Accounts
- Real Estate
- Stocks and securities
- Life Insurance Policies
- Automobiles, jewelry, antiques and other collectibles
Why you should have an estate plan:
- To ensure that your property is transferred to those you wish to receive it
- Ensure that your wishes are fulfilled after you are gone
What Leaving a Legacy to support the National Exchange Club Foundation will accomplish:
- Supports child abuse prevention (CAP) which includes administrative support for centers throughout US. Provides money for the symposium
- Provides scholarship money for the Youth of the Year and A.C.E. award winners
- Supports all of the Exchange programs of service
Strategies for making contributions to the foundation
IRA's:
Required minimum distribution: at 70 1/2 must start taking distributions from your IRA. The required amount is calculated by using your IRA balance as of the preceding December 31 divided by a life expectancy figure (at age 70 this number is 27.4). The RMD is taxable and can also cause your Social Security to be taxed.
Strategies to reduce the tax effects of the RMD:
- Make a direct contribution to the foundation: this will have an effect of reducing your tax bill (assuming you can itemize).
- Use the RMD to pay the premium on a life insurance policy with the foundation the owner and beneficiary. This will also remove it from your estate.
Donor advised funds: a donor advised fund (DAF) is a vehicle which allows you to get an immediate charitable deduction while continuing to control the disbursement.
Strategies for using a DAF include:
- Lump sum or severance pay: the money received will be taxable to you. You can set up a DAF and put the bonus money into it offsetting the taxable income. You can then establish an annual payout to the foundation and also retain the ability to make additional payments.
- Inheritances: you can set up a DAF and put a part of your inheritance in it. You can use this donation to offset your income tax.
When is the best time to donate?
While you're alive: you get a tax deduction for the contribution; you get the satisfaction of watching your money work; the Foundation gets the opportunity to use the money sooner to continue the work of the foundation.
Upon your death: the money passes through your estate which allows you to keep control of your money while you're alive.
Which is better to give retirement money or non-retirement money upon your death? If you give retirement money to a charity there will be no income taxes paid by beneficiaries. If you have an equal amount of money that you want to leave to a charity and to your beneficiaries it might make sense to donate the retirement account.
In summary: there are numerous opportunities for you make a contribution to the Foundation while you're alive or upon your death. Just know that no matter how big or small the donation it will be put to good use. You can designate what you want your donation to be used for (called restricted use) or you can just donate without any restrictions.
DISCLAIMER: This information is provided with the intention of providing informative materials of a general nature only and is not intended to provide legal or tax advice. Please consult with your legal or tax advisor to determine the legal and tax effects of your personal circumstance.