The Women's Fund of New Hampshire

With careful planning, there are many ways you can support the future of the Women’s Fund of New Hampshire while simultaneously meeting some of your own personal financial goals and objectives. You may include WFNH in your estate plans by making a life income gift or by naming WFNH as a beneficiary of a will, trust, retirement plan, or insurance plan. This site outlines some of the many gift options available and their various tax and income benefits. Please email us at info@wfnh.org for more information, and always consult with your financial advisor or attorney when considering estate planning.

To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this web site was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any tax-related matter addressed herein. This statement is made pursuant to Circular 230 (U.S. Treasury Regulations governing tax practice).

Bequests

The simplest way to leave a planned gift to benefit the Women’s Fund of New Hampshire is to make a bequest including specific language in your will or living trust naming WFNH as the recipient of a testamentary gift. Your will or living trust can include gifts in the form of cash, securities or personal property. You may contribute a specific dollar amount, a percentage of your estate or the residual of your estate in this manner. Your estate will receive a charitable deduction for the full donation, so your heirs will not pay estate tax on these assets.

Charitable Remainder Trust

By transferring assets to establish a Charitable Remainder Trust, you receive an immediate tax deduction and lifetime income for you or your named beneficiary. You also reduce or avoid capital gains taxes associated with the gifted asset. Eventually, when the trust's term is complete, the remaining assets pass on to the Women’s Fund of New Hampshire.

Charitable Lead Trust

When you create a Charitable Lead Trust, the CLT makes regular income-tax-deductible gifts to the community foundation as the income beneficiary. When the trust terminates, the entire principal is returned to you or to your family.

Retirement Plan Donations

Naming the Women’s Fund of New Hampshire as a beneficiary of your retirement funds, such as an IRA, 401k or 403b, is a simple and effective way to benefit the community while avoiding significant, often unanticipated tax penalties. Your retirement plan is tax-deferred only until death. The remainder of these assets are subject to multiple taxes when included in your estate, resulting in a tax rate of 60 percent or more. Donating retirement accounts can reduce or eliminate these taxes completely and make a significant impact on the community.

Life Insurance Donations

Among the many ways to donate life insurance, the simplest is to designate WFNH as a beneficiary of the policy. You may also transfer ownership of a paid-up policy to WFNH, or donate insurance policy dividends.

GLOSSARY OF TERMS

This is strictly for your reference. Please contact your professional advisor(s) for information. To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained on this Web site was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code, or (2) promoting, marketing, or recommending to another party any tax-related matter addressed herein.

529 Plans: A 529 plan is a popular financial instrument that allows parents, grandparents, or anyone interested in saving for higher education to own and control funds that offer investment choices and are free from federal tax on distribution. Many states have their own plans, managed by professional investment managers, and you don't have to live in that state to invest your money there. A few states even offer a state income tax deduction for contributions to these funds.

Annuity Trust: An annuity trust is a type of charitable remainder trust that pays the same fixed dollar amount every year. This yearly amount is determined when the trust is established and must be at least 5 percent of the initial fair market value of the trust's assets.

Bargain Sale: A bargain sale is part gift and part sale. A donor can give appreciated property to WFNH at a “bargain” price. Because capital gains are apportioned between the donor and WFNH, the donor reports a smaller capital gain and receives a charitable income tax deduction for the net value of the gift.

Bequest: A donor can name Women’s Fund of New Hampshire in her will as the recipient of all or a part of her estate at death.

Beneficiary: The person or persons whom you designate to receive the benefits or proceeds of your financial instruments.

Charitable Gift Annuity: A gift annuity is a contract between a donor and the Women’s Fund of New Hampshire that will provide a guaranteed, fixed income for the life of the donor or other designated beneficiary. Gift annuities generate an immediate charitable income tax deduction. Capital gains are reduced dramatically and can be reported over a number of years so that those taxes are not due all at one time. Annuities based on two lives are also available, but the rates are generally lower.

Charitable Lead Trust: A charitable lead trust is the opposite of a life income gift arrangement: the donor places assets in trust, and the trust generates annual income for charity over a period of years. After a specified length of time, the assets come out of the trust and become the property of the donor's heirs. The lead trust is a valuable means of transferring assets to heirs at reduced gift and inheritance taxes. Although the donor will likely pay gift taxes (and possibly generation-skipping taxes) upon creating the trust, the assets in the trust will grow tax-free during its term, which is typically 20 years. When the heirs receive the assets at the end of the trust term, there will be NO inheritance taxes applied to that transfer. The donor can name multiple charitable beneficiaries to receive payouts from the trust during its term. The donor can also use non-cash income-producing assets to fund the trust. Commercial real estate is a good example of a non-cash asset that can be passed to younger family members through a charitable lead trust. Charitable lead trusts are complex and require advice from experienced attorneys.

Charitable Remainder Trust: Charitable remainder trusts are flexible instruments that enable donors to:

Claim a charitable tax deduction in the year the gift is made.
Provide an income stream for themselves or someone else.
Remove assets from their taxable estate.
Make a significant gift to one or more charities.

A donor can place an asset in a trust and designate a trustee to manage the trust. From that trust, the donor (or a person that the donor has named) receives a specified sum at set intervals—usually every quarter. When the donor or beneficiary dies, or after the predetermined number of years, what's left in the trust (the “remainder”) goes to charitable organizations. The annual payments differ according to the kind of trust.

An annuity trust pays the same fixed dollar amount every year. This yearly amount is determined when the trust is established and must be at least 5 percent of the initial fair market value of the trust's assets.
A standard unitrust pays a variable amount each year. The amount is equal to a predetermined percentage of the fair market value of the trust that year, at least 5 percent.
A net income unitrust also pays a variable amount each year. The amount is equal to the net income produced by the trust that year or a predetermined percentage of total assets, whichever is smaller. (Trust provision can provide that payments may be increased in some years to make up for earlier years when net income was lower than the predetermined percentage.)

Trusts are very well suited for gifts of cash and appreciated securities, and can also be funded with real estate, privately held stock or other non-cash assets. Charitable remainder trusts allow donors flexibility in that they may choose their own payout rate and their own trustee. The minimum payout rate allowed by law is 5 percent.

Cost Basis: Cost basis is the amount you pay for an asset such as shares of stock or real estate. This figure is used to determine how much appreciation (capital gain) you have in an asset.

Deferred Payment Gift Annuity: A deferred payment gift annuity (DPGA) provides a guaranteed, fixed income for the life of the donor or another designated beneficiary beginning at age 60 or older. It is similar to a charitable gift annuity except the beneficiary’s income payments are deferred to a later date. That provides a higher charitable tax deduction when the gift is made and locks in a higher payout rate. For example, a 50-year old donor agrees to make a gift now, but defers receiving payments until she/he reaches age 65 when it will serve as supplemental retirement income. The deferral of payments locks in a higher fixed rate.

Deferred payment annuities based on two lives are also available, but the rates are generally lower.

A substantial portion of each payment is tax-free. Even though the beneficiary does not start receiving payments until a pre-selected future date, a portion of the gift is immediately deductible for federal income tax purposes on an itemized return. Capital gains are reduced and can be reported over a number of years (if the donor is also the income beneficiary).

Flexible Gift Annuity: A flexible gift annuity is structured so that the annuitant has control over the date at which payments begin. This may be a good gift vehicle for those who are unsure of their retirement date.

Flip Trust: A “flip” trust is a hybrid of a net income trust and a standard unitrust. This vehicle is especially useful when funding a trust with an illiquid asset such as real property or tangible personal property. Until the asset is sold, the trust only pays the lesser of the net income or the stated payout rate. Once the illiquid asset is sold, the trust “flips” and begins to act like a standard unitrust paying the stated payout rate.

Gift Annuity: A gift annuity is a contract whereby the donor makes a gift to the college and, in turn, the charitable organization promises the donor, or another specified beneficiary, a fixed dollar payment every year for life. The yearly payment is based on the amount of the gift and the age of the income beneficiary at the time of the gift. Gift annuities may be for one or two lives but both beneficiaries need to be at least 60 years of age.

Gift Tax: Gift tax is levied on gifts to non-charitable beneficiaries. As of 2006, an individual can give away $12,000 each year to as many people as she wishes without being subject to gift tax. Transfers over and above that $12,000 may be subject to gift tax.

Living Trust: A living trust is a document with which you direct the transfer of your assets at your death. A living trust helps assets pass outside of the probate process, can continue after your death, and is revocable at any time.

Long Term Assets: An asset held long term is any asset that you have held longer than one year.

Pooled Income Funds: The gift is pooled with other contributions in a professionally managed fund. The donor or other beneficiary receives a proportionate share of the fund’s annual income for life. The income varies depending on how much the fund earns and the number of shares the donor holds in the pool.

Power of Attorney: You can name someone—not necessarily an attorney—to make financial and other important decisions for you in case you become mentally or physically incapacitated. Unless this document exists, the court can appoint someone to make these decisions for you.

Probate: Probate is a judicial process where ownership and distribution of assets are reviewed. Ways to avoid probate include assignment of life insurance, placing assets in a revocable trust, establishing joint tenancy with rights of survivorship, and designating beneficiaries on retirement accounts. Probate can be costly and time consuming and the court's proceedings are, by law, a matter of public record.

Retained Life Estate: A donor can give a personal residence, such as a home or condominium, to charity and retain use of the property for the remainder of her/his life. The donor continues to live in the property yet takes a charitable income-tax deduction for the “remainder” interest given to charity. The donor continues to be responsible for taxes, insurance and maintenance on the property until his/her death. If the donor chooses to move out of the property, the gift is accelerated and the donor can claim an additional charitable tax deduction.

Split Interest Gift: A split-interest gift is any gift in which a portion assigned to charity and a portion benefits the donor or her designee. Charitable gift annuities, pooled income funds, and charitable remainder trusts are all varieties of split-interest gifts.

Step Up: A “step up” in [cost] basis means that you have no capital gain in inherited assets if you choose to sell them immediately. Cost basis is the amount you pay for an asset such as shares of stock or real estate. This figure is used to determine how much appreciation (capital gain) you have in an asset.

Tangible Personal Property: The IRS defines tangible personal property as “any property, other than land or buildings, that can be seen or touched. It includes furniture, books, jewelry, paintings, and cars.”

Unitrust: A standard unitrust pays a variable amount each year. The amount is equal to a predetermined percentage of the fair market value of the trust that year, at least 5%. A net income unitrust also pays a variable amount each year. The amount is equal to the net income produced by the trust that year or a predetermined percentage of total assets, whichever is smaller. (Trust provision can provide that payments may be increased in some years to make up for earlier years when net income was lower than the predetermined percentage.)