Foundation
Ways to Give
Frequently Asked Questions About Planned Giving
- Can the Foundation help me get my estate plan done?
- How do I include the Foundation in my will or living trust?
- What’s the big advantage in making the Foundation a beneficiary of my retirement plan?
- What kind of donors should consider a charitable remainder trust?
- How can I give my home and keep it, too?
- Why does the Foundation need planned gifts?
- What should I do if I have already remembered the Foundation in my estate plan?
- Can you provide me with an estimate of my tax and income benefits?
Can the Foundation help me get my estate planning done?
Yes. Just ask for our free estate planning kit. The Kit includes:
- A readable but authoritative introduction to wills, living trusts and basic estate planning
- An Estate Planning Inventory Form to help you get a clearer notion on the worth of your estate
- Information on how to remember the Foundation in your estate plan.
Effective estate planning usually takes time, effort and a good attorney. In the end your plan will allow your family to avoid the delay, dissension and needless expense that often occurs when a loved one dies without a Will. Once you have taken care of your family's needs, please consider a thoughtful bequest to the Foundation.
How do I include the Foundation in my will or living trust?
The most common way people remember the Foundation in a will or living trust is through a charitable bequest. You do not have to rewrite your current documents. You simply add an amendment, called a codicil, to your will or living trust. Here is some suggested language you can have your attorney review:
" I give devise and bequeath to Santa Rosa Memorial Hospital Foundation, located in Santa Rosa, California, the sum of (amount) dollars ($xxx) (or state a percentage of your estate, or state a percentage of your estate, or describe real or personal property, including exact location) for the benefit of its general purposes (or specify the Santa Rosa Memorial Hospital Foundation program you wish to support).
Your bequest is entirely under your control during life and becomes irrevocable only at death.
What’s the big advantage in making the Foundation a beneficiary of my retirement plan?
A designation in your IRA or other retirement plan may be a very cost-effective way of making a gift to the Foundation. If you leave your retirement plan to your children, they will have to pay income tax on either a lump sum distribution or the income stream from the plan. The Foundation does not pay this tax. Here’s an example of what this can mean to your heirs:
A widower died a few years ago. He left his $300,000 house to charity and his $300,000 retirement plan to his relatives. He should have done just the opposite. The relatives had to pay income tax on the $300,000 in the retirement plan, an $80,000 cost to them. If they had received the home, and the charity had received the retirement plan payment, no one would have paid income tax.
What kind of donors should consider a charitable remainder trust?
Donors who want income for life, bypass of capital gains tax on stock or real estate, reduced taxes, and the satisfaction of providing for a good cause like the Foundation.
First, a few words about charitable trusts generally.
Anything you place in a charitable trust--cash, stock, real estate--is invested by the trustee to pay you income for the rest of your life and, if you wish, pay your heirs for life or for a term of years. After the death of all income beneficiaries, what remains in the trust passes to the Foundation.
Your trust may provide you with some important tax benefits:
- An immediate income tax deduction for a percentage of your gift. We will be happy to give you an idea of the size of your deduction. We simply need to know the ages of the income beneficiary (ies) and the payout rate of the trust.
- No tax on the sale of appreciated property. From the donor's point of view, this is often the most important tax benefit. Sometimes thousands of dollars that would have gone in capital gains taxes remain in the trust generating income to the income beneficiaries.
- The trust principal is not subject to estate tax. Property that might otherwise be subject to federal estate tax, which can be has high as 45%, is preserved from estate tax entirely.
Appreciated real estate is often an excellent asset to place in a charitable trust. Mature investment properties are frequently earning only two, three, or four percent of their fair market value per year. When these properties are sold and the proceeds reinvested by the trust, earnings often increase significantly.
Under ordinary circumstances, owners face substantial capital gains taxes when they sell rental properties or commercial real estate. In some cases personal residences are also subject to capital gains taxes even after the personal exemption has been used. In any case, because your charitable trust will be selling the property, there will be no capital gains taxes due when the real estate is sold. Thus the entire net proceeds from the sale can be reinvested to produce more income for you.
Gifts of appreciated stock are ideal for funding a charitable remainder trust because the stock can be reinvested by the trust for greater income while bypassing capital gains taxes at the time of the sale.
Some people find it useful to give an undivided percentage interest of real estate to a charitable trust rather than all of it. For example, a donor contributed 75% of a vacant lot into a charitable trust. When the lot was sold, about $70,000 came directly to her from the sale while $210,000 remained in the trust. Some of her $70,000 was taxable, but she used the income tax deduction generated by her gift to the trust to offset the tax due on the gain built into the $70,000 she received.
There are two basic types of charitable remainder trusts. An annuity trust will pay you a fixed dollar amount for the rest of your life. A unitrust will pay you a fixed percentage of the trust principal each year, so if the value of the trust principal increases over time, your income increases with it. By law, your trust must pay you at least 5% of principal. You may choose a higher payout rate if you wish, but the higher the payout rate the lower your income tax charitable contribution deduction. Also, selecting the highest rate possible may not work in your best interests for another reason. If trust principal declines under the strain of meeting the higher rate, your income will decline with it. On the other hand, a lower payout rate may allow the principal to grow, and your income will grow with it. Additions can be made to a unitrust at any time, but you can contribute to an annuity trust only once.
Finally, your trust must have a trustee. If you have an individual trust tailored to your circumstances, the trustee can be a commercial institution such as a bank or trust company, an individual with professional experience in trust management, a relative, or yourself. There are some complications in acting as trustee yourself, but it can be done if you understand and comply with IRS regulations. Our organization will be happy to supply you with a list of possible trustees or information on being your own trustee.
The basic advantages of charitable trusts are not difficult to understand:
- diversification of your assets without incurring capital gains taxes
- lifetime income
- immediate income tax benefits
- reduction of estate tax
- the satisfaction of providing for a good cause
There are even ways these trusts can benefit your heirs that we have not covered. But the first thing you should do is find out if a charitable trust makes sense for you.
Santa Rosa Memorial Hospital Foundation will provide you with estimated tax and income calculations tailored to your particular situation. This will give you and your advisors the information needed to make an informed decision as to whether a charitable trust meets your financial and philanthropic objectives. All information is provided confidentially and without cost or obligation. Our organization deeply appreciates your willingness to help continue its work.
How can I give my home and keep it, too?
A charitable life estate agreement allows you to give a personal residence or farm to the Foundation while retaining the right to live there for life. Donors who enter a life estate agreement receive an immediate income tax deduction. The deduction is based on the present value of the home discounted by the estimated length of time the charity must wait to receive the home. To put it simply, a person age 70 will receive a larger deduction than will a person age 50, all other things being equal.
The IRS grants the deduction even though the donor continues to enjoy full use of the home. But the IRS also expects the owner to have full responsibility for the care and maintenance of the home. That's why life tenancy agreements simply continue things as they are currently, with the donor dealing with maintenance, property taxes, insurance and the like. The major benefits to the donor, then, are continued use of the home, an immediate charitable income tax deduction, the avoidance of probate, the avoidance of estate tax on the property, and the satisfaction of making a substantial gift to the Foundation during one's lifetime.
Why does the Foundation need planned gifts?
For over 50 years philanthropic support, including charitable bequests, has played a major role in making sure Santa Rosa Memorial Hospital is here when it is needed most. Santa Rosa Memorial Hospital Foundation was formed in 1991 to assure that this tradition continues by assisting the Hospital in developing goodwill and financial support for programs, services, and activities that fulfill the healing mission of the Sisters of St. Joseph of Orange and position Santa Rosa Memorial Hospital as a leading innovative Catholic hospital.
We are drawing on the strengths of our past – particularly the tradition of service to the community that created the Foundation in the first place. The volunteer spirit – the desire to make things better for everyone here, just because it’s the right thing to do – is still what drives the Foundation.
Your bequest to the Foundation, whether for general purposes or a specific program, will help Memorial Hospital meet the community’s future health care needs and continue to have the best possible facilities and equipment. Your bequest allows you to express your lasting concern for your community, your neighbors and your family by keeping Memorial Hospital a top-quality institution.
What should I do if I have already remembered the Foundation in my estate plan?
We would be honored to enroll you in the Foundation’s Legacy Circle, so please let us know of your bequest by contacting the Foundation Office at (707) 525-5300 ext. 4679 or susan.sudduth@stjoe.org. Or fill out and mail the attached form to:
Susan Sudduth
Director of Planned Giving
Santa Rosa Memorial Hospital Foundation
Can you provide me with an estimate of my tax and income benefits?
Yes, we can provide you with estimates of the tax and income benefits you will receive if you take out a charitable gift annuity, create a charitable remainder trust, or open a charitable pooled income fund account. We need to know the birth dates of those who will receive income from these charitable tools and the kind of gift you have in mind (cash, stock, real estate). These calculations are for educational purposes only and should be reviewed by qualified independent advisers of your choosing.
To speak with Foundation staff about planned giving, please contact Susan Sudduth.
Susan Suddath
Phone: 707-525-5300 X 4679
Email Address: Susan.sudduth@stjoe.org