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Gifts to the Reporters Committee and Your Estate Plan
Estate plan options
As part of its drive to ensure a strong future for the organization, the Reporters Committee has developed these suggestions for possible gifts through estate plans. An estate plan involves various technical documents that should be drafted by an attorney. You may designate the Reporters Committee to receive:
an outright bequest for a fixed amount
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the residue of your estate
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a percentage of the residue of your estate
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a percentage of your entire estate
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A bequest contingent upon the failure of other bequests
Gifts via will or trust:
The most common method of charitable giving is through a will or personal trust. A will or trust can give the Reporters Committee a specific cash amount or property, or a percentage of your estate. Alternatively, a residuary bequest can give the Reporters Committee a portion of the estate after all other bequests, debts, taxes, and expenses have been satisfied. In a cases when you are not survived by your intended beneficiaries, you can also make a contingent bequest to ensure that the Reporters Committee will be provided for rather than unintended beneficiaries. Gifts made through your will or trust will enable your estate to take a tax deduction up to the value of the property transferred. The following language may be incorporated into your will or trust in order to make a bequest to the Reporters Committee:
Outright Bequest (fixed amount):
"I give, devise and bequeath to the Reporters Committee for Freedom of the Press, Federal Tax ID #52-0972043, the sum of $_______ (and/or the following property:___________) to be used in such a manner as the Steering Committee of the Reporters Committee for Freedom of the Press shall, in its sole discretion, determine."
Residue of Estate:
If you decide that you may first want to provide specific bequests to family and friends before providing for the Reporters Committee, the residuary bequest may be appropriate. This type of bequest leaves the "leftover" of your estate to the Reporters Committee after specific bequests.
"I give, devise and bequeath to the Reporters Committee for Freedom of the Press, Federal Tax ID #52-0972043, the rest, residue and remainder of my estate (as defined in this will) to be used in such a manner as the Steering Committee of the Reporters Committee for Freedom of the Press shall, in its sole discretion, determine."
Percentage of Residue of Estate:
If you decide to have more than one nonprofit organization or person share in the "leftover" portion of your estate, then a percentage of residue bequest may be appropriate.
"I give, devise and bequeath to the Reporters Committee for Freedom of the Press, Federal Tax ID #52-0972043, __________ percentage of the rest, residue and remainder of my estate (as defined in this will) to be used in such a manner as the Steering Committee of the Reporters Committee for Freedom of the Press shall, in its sole discretion, determine."
Percentage of Estate:
If you decide to leave a gross percentage of your estate to the Reporters Committee rather than a fixed monetary bequest, then a percentage of estate bequest may be appropriate. However, it is critical to work with your adviser when drafting such a bequest in order to make your wishes clear so that friends and family receive their proper share.
"I give, devise and bequeath to the Reporters Committee for Freedom of the Press, Federal Tax ID #52-0972043, __________percentage of my estate (as defined in this will) to be used in such a manner as the Steering Committee of the Reporters Committee for Freedom of the Press shall, in its sole discretion, determine."
Contingent Bequest:
If you decide that family and friends should receive your entire estate if they survive you, but want to provide for the Reporters Committee if you outlive any beneficiaries, then a contingent bequest may be appropriate.
"In the case of the failure or lapse of any legacy or devise herein such that the property so bequeathed or devised would other wise pass by intestacy, I give, devise and bequeath any such failed or lapsed legacy or devise to the Reporters Committee for Freedom of the Press to be used in such a manner as the Steering Committee of the Reporters Committee for Freedom of the Press shall, in its sole discretion, determine."
Lifetime gifts:
Gifts made during your lifetime are another important estate planning technique because they provide you with the benefit of an income tax deduction during your lifetime, as well as avoiding estate tax on the value of the gift. Outright gifts of cash are simple and are tax-deductible up to 50 percent of your adjusted gross income in the year of the gift (the excess may be carried over for the next five years). Cash gifts may be made by making your check or money order out to "Reporters Committee for Freedom of the Press."
Gifts of appreciated property, such as securities and real estate, are also popular because not only is the fair market value of such gifts deductible up to 30 percent of your adjusted gross income for the year in which the gift was made (with a five-year carry over), you may also avoid paying capital gains tax on such appreciated property. A similar income tax deduction is available for gifts of tangible personal property to the Reporters Committee if the property is related to the exempt purposes of the Reporters Committee but, if not, the deduction is limited to the donor's basis in the property. Please contact your tax adviser or legal counsel for more information on how to make gifts of appreciated property.
Gifts of retirement assets
A gift of retirement plan or IRA balances is another estate planning method that is becoming increasingly popular due to the fact that such retirement and IRA balances are subject to both income and estate tax rates, that can total 85 percent. Funding a charitable bequest to the Reporters Committee with your IRA or retirement plan proceeds allows you to avoid this income and estate tax liability and to make a gift with pre-tax dollars.
Complex trusts, funds and annuities
These are more complex charitable giving mechanisms that are frequently part of an estate plan. These gift methods may be implemented during your lifetime or at death:
Charitable Remainder Trusts - involve a gift of property to the Reporters Committee in trust with the donor receiving a fixed amount or percentage of income from such property for his or her lifetime and the Reporters Committee receiving the remainder at the death of the donor.
Charitable Lead Trust - is like the Charitable Remainder Trust except in reverse in that the Reporters Committee receives the income from the donated property for a certain period of time and the donor receives the remainder.
Pooled Income Fund - is when two or more donors irrevocably transfer property to the Reporters Committee, which then invests the property and distributes the annual proceeds to the donors or their directed beneficiary for a certain period of time at the end of which the remainder is contributed to the Reporters Committee.
Charitable Gift Annuities - is a contract between the donor and the Reporters Committee whereby the Reporters Committee agrees to pay one or two annuitants a fixed dollar amount (based on life expectancy) each year for life in exchange for a contribution of property.
By making such gifts, the donor (1) avoids estate taxes by removing the asset from his or her estate (and capital gains tax if an appreciated asset is used), and (2) receives an income tax benefit that is generally calculated using a variety of factors such as the donor's age, the trust's payout rate, and the federal discount rate. Please contact your tax adviser or legal counsel for more information on how to implement the above gift mechanisms.
The preceding types of charitable giving are only some of the more common means of incorporating the Reporters Committee into your estate plan. Other alternatives exist that may offer particular advantages to your circumstances. Please contact Lucy Dalglish, Executive Director, at 703-807-2100 for more information.
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