Including a charitable bequest as a part of your will is a great way for you to provide long-term support for the McFarlin Foundation while also effectively managing your estate. Making a charitable bequest is easy. If you want to leave a bequest to the McFarlin Foundation, you must specifically do so in a will or trust. Your will or personal trusts are legal records of your wishes regarding how your assets should be handled at your death. Instructions regarding the dispensation of your assets are called bequests.

Charitable Bequests are not subject to estate or inheritance taxes, therefore reducing the tax burden of an estate. Charitable bequests also provide flexibility because they may be changed at any time. Your estate will be entitled to a charitable deduction for the full, fair market value of your gift. The McFarlin Foundation can assist you and your attorney with standard legal language necessary to establish your charitable bequest.

• General Bequest: With this type of bequest, you simply leave a specified dollar amount (e.g., $25,000) to the McFarlin Foundation.
• Specific Bequest: A bequest of this type involves the designation of specific property (e.g., a home, a farm, or shares of stock) that you want the McFarlin Foundation to receive.
• Residuary Bequest: Through a residuary bequest, the McFarlin Foundation will receive the remainder of your estate after all liabilities and other bequests have been paid. It may augment a general or specific bequest to the McFarlin Foundation if the size of the estate allows, or may ensure that other beneficiaries receive their bequests prior to distribution to the McFarlin Foundation.
• Percentage Bequest: You may direct that the McFarlin Foundation receive a percentage of your estate or residuary estate. In this case, if the size of your estate changes, the bequest will change proportionately.
• Contingent Bequest: It is important to anticipate a situation in which a beneficiary might die before you or choose to disclaim the property. To prepare for such an occurrence, consider naming the McFarlin Foundation as the contingent beneficiary.

You may have purchased life insurance when you needed protection for your family, business or estate. In later years, you have found you no longer need that insurance. If you want to achieve immediate tax benefits, you should consider irrevocably assigning an insurance policy to the McFarlin Foundation.

Giving life insurance as a gift to charity allows even those with modest means to leave a substantial contribution to the cause most meaningful to them. A gift of life insurance is a deferred gift, which means the proceeds from a commitment made now will be realized in the future. Donors often struggle between their desires to achieve philanthropic goals and their need to preserve their estates for their families. A gift of life insurance can eliminate this conflict.

In addition to gifting an existing life insurance policy, a new life insurance policy can be purchased from your life insurance professional naming the McFarlin Foundation as owner and beneficiary. The initial premium payment plus subsequent insurance premium payments made by the donors are deductible as charitable contributions. A gift of insurance will not reduce your current stream of income.

A retirement plan is one of the best types of assets to transfer to the McFarlin Foundation following death because of the income tax consequence. Most inherited assets are free from income tax. However, an heir will pay income tax on disbursements from a decedent’s retirement plan such as a profit sharing plan, Section 401(k) plan or IRA. If you are going to make a charitable bequest, it is usually better to transfer assets subject to income tax to a tax-exempt charity – such as the McFarlin Foundation – and to transfer assets not subject to income tax to heirs.

For a taxable estate, the combination of estate and income taxes will frequently exceed 75 percent of the total amount – even more if the generation skipping transfer taxes are triggered. At a cost to your heirs of only 25 percent of the fair market value of these types of assets, you could apply 100 percent of the assets to the McFarlin Foundation to accomplish your specific charitable objectives. Estate taxes change, so be sure to consult an accountant.

Of course, married couples can postpone the decision by transferring the assets to the surviving spouse and claiming the marital estate tax deduction. However, since that deduction is not available to unmarried individuals and the second-to-die of married couples, a charitable bequest of pension plan assets might be the best option.

A retained life estate is a gift of real estate (like a home or farm) to a charity, where the donor retains the right to live in or use the property for their lifetime or a specified period, while the charity receives the remainder interest.

A charitable gift annuity is a contract between a donor and a charity where the donor makes a gift to the charity and, in return, receives a fixed income stream for life, along with potential tax benefits.

A charitable remainder trust is an irrevocable trust that allows you to donate assets to charity while receiving income for yourself or other beneficiaries, with the remaining assets going to the charity upon the trust’s termination, providing tax benefits and estate planning advantages.

If you desire to contribute to the McFarlin Foundation anytime during your life, please contact Senior Director of Operations, Stephen Mitchell to discuss your charitable intent. Donors who give during life get to see the benefits of their gifts and realize the tax benefits of giving.

A gift of stock is one of the easiest methods to make a gift. If the stock has appreciated, the donor not only avoids the capital gains tax on the appreciation but also receives a charitable deduction for the full fair market value of the stock at the time of contribution.