Chester County Community Foundation

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Chester County Community Foundation
The Lincoln Building
28 West Market Street
West Chester, PA 19382
610-696-8211 (t)
610-696-8213 (f)

info@chescocf.org
www.chescocf.org

For Good. Forever.

 

planned giving...

The Chester County Community Foundation can assist donors who wish to establish Charitable Gift Annuities.

Click here to download a copy of our Nonprofit Planned Giving Services Manual.

FAQ:

What is a Charitable Gift Annuity?

~ The Community Foundation can establish a Charitable Gift Annuity for a donor with one brief meeting and a gift between $10,000 and $500,000.

~ The donor makes a tax-deductible gift in the form of cash, marketable securities, or other assets.  A contract is signed, which is an irrevocable agreement between the donor and the Community Foundation on behalf of the Fund.

~ The Community Foundation invests and manages the contribution, and pays the donor a fixed annuity for life, guaranteeing the donor a predictable stream of annual income.

~ When no longer needed by the donor, the remainder goes to the Fund at the Community Foundation, as designated by the donor.

~ In general, the donor (annuitant) must be at least 60 years old, although the Community Foundation can accept gifts from younger donors to create deferred annuities that will commence when the donor reaches age 60 or later.

~ Long-term appreciated assets, such as stocks, that are used to make the gift result in additional tax savings by avoiding capital gains on the charitable portion of the gift.

What are the annuity rates?

~ The amount of each annuity payment is determined by annuity rate tables published by The American Council on Gift Annuities.  The rates depend upon the value of the initial gift and the number of annuitants and their age.  Here are the 2003 rates:

If you are age:

Then you can earn (per year)

85

9.7 %

80

8.3 %

75

7.3 %

70

6.7 %

60

6.3 %

The Community Foundation can generate exact figures for prospective donors on annuity rates, annual annuity payments, and tax deductions when provided with: donor age, spouse age; gift amount or range.

What Charitable Gift Annuity Services does the Community Foundation provide?

~ If desired, meet with donors to discuss Charitable Gift Annuities and help them explore their options.

~ Provide calculations to help donors estimate what annuity payment they could expect, and the amount of the charitable deduction.

~ Create a contract establishing the Charitable Gift Annuity, and review it with the donor to make sure the gift instrument is understood.

~ Manage the annuity funds as part of our investment services, including assuming the annuity obligation.

~ Issue annuity checks to annuitants on a quarterly basis.

~ Prepare annual Federal tax forms and provide them to donors and annuitants.

~ Recognize donors as contributors to the Fund in our annual report.

~ Transfer the remainder of the Charitable Gift Annuity into the Fund.

INITIAL CALCULATIONS

Click here for initial calculations for an annuitant who is currently 80 years of age and seeks to donate $100,000.  This is provided for informational purposes only. CCCF can provide exact calculations if provided with the birth date of the donor and/or their spouse as well as the gift amount.

GIFT ANNUITY AGREEMENT CONTRACT

Click here for a sample gift annuity agreement contract, including Schedules A & B, and a sample bank form.

Gift annuities are relatively simple to establish, and there are no legal fees incurred when established through the Chester County Community Foundation.  It is possible for one donor  to name a few nonprofits to benefit from their gift annuity through the Chester County Community Foundation, as long as we establish "Shells" so that CCCF holds the remainder in an endowed trust or as a provisional fund, per the donor's intent.

The Chester County Community Foundation staff is at your service to provide more detailed information as desired, in person or by phone.

BEQUESTS

Bequests are the most popular form of planned giving, in which a CCCF Fund is named to receive a percentage, a dollar amount, or the remainder of a donor’s estate. Bequests enable donors to reduce their estate taxes while supporting their community.

 

For those donors who have not already set up a fund at CCCF, it is still easy to make a bequest. 

 

Upon notifying the Community Foundation of an intended bequest, a Fund “shell” is established at the Community Foundation, so all is in order when the donor is ready to leave their bequest.

 

Here is sample language for donors to include in their wills: 

 

“I give ____% or $______ or the remainder of this Trust to the Chester County Community Foundation, to be held as part of the (Name the CCCF Endowed Fund.”

 

The Community Foundation encourages donors to work with their legal counsel to include their bequest donation as part of their overall estate planning.  However, some donors prefer a bequest pledge form, which they can then bring to their legal counsel.  Click here for a sample.

CHARITABLE REMAINDER TRUSTS

“The greatest use of life is to spend it for something that will outlast us.”

Most people, whether or not they consider themselves to be charitably inclined, regularly give away much of their money and resources through taxes.  Charitable trusts are a way for donors to redirect some of their money to programs and priorities they care about.  There are several types of Charitable Remainder Trusts:

CRAT:  Charitable Remainder Annuity Trust

CRUT:  Charitable Remainder Unitrust

CLAT:  Charitable Lead Annuity Trust

CLUT:  Charitable Lead Unitrust

 

 

1. Illustration of Tax Effects:

Here is an illustration of the tax effects on several types of Charitable Trusts.  The assumptions are based on a $1,000,000 gift and 6% annual growth.  The applicable federal estate tax rate is 35% and the IRS 7520 rate is 2%.

The Chester County Community Foundation thanks J. Stoddard Hayes, Jr., Esq., & Kevin Holleran, Esq. of Gawthrop, Greenwood, P.C. for allowing us to use this chart they developed. View as a .PDF

 

2. What is a Charitable Remainder Trust?

 

~ A donor transfers cash or equities irrevocably to a trust.

 

~ The trust is invested and managed by the Community Foundation.

 

~  The donor receives either fixed or fluctuating income payments for life.

 

~ When no longer needed by the donor, the remainder goes to a Fund at the Community Foundation, as designated by the donor. 

 

~ This is a good opportunity for a donor to make a gift of assets that have increased in value learn little income.  By funding the trust with these assets, the donor can receive an income without paying capital gains tax.  Cash may also be used to fund the trust.

 

~ Tax Consequences:  The donor receives a current income, gift, or estate tax deduction for the present value of the charitable remainder interest.  Gifts of cash are deductible up to 50% of the donor’s adjusted gross income with a five year carryover.  Gifts of appreciated property can be deducted up to 30% of the donor’s adjusted gross income with a five year carryover.  The donor minimizes capital gains tax if the gift is made with appreciated property.

 

3.   What is a Charitable Lead Trust?

 

The Community Foundation can also administer Charitable Lead Trusts, which are similar:

 

~ A donor places assets in a trust for a set number of years.

 

~ A CCCF Fund receives annual payments from the trust for a certain number of years.

 

~ When the trust terminates, the trust principal is returned to the donor or distributed to heirs.

 

~ Tax Consequences:  Donors make significant charitable gifts in the near term while transferring substantial assets to beneficiaries later.  The delay in the receipt of funds allows them to be transferred at a significantly lower gift or estate tax cost.  The estate receives an income tax deduction for the present value of future payments to the CCCF Fund; the estate is taxed on the trust income, whether or not it is paid to a charitable beneficiary; and the donor receives a gift or estate tax deduction for the value of the charitable interest.

 

 

 

 

 

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