Palmer Trinity School

16 S O A R I N G T O G R E A T E R H E I G H T S | I N S E R T S are pooled together and managed by investment advisers. Income is paid quarterly to you and a second person, if desired, until the last of the beneficiaries dies. At that time, the principal is transferred to the organization. Income will fluctuate based on the earnings of the fund. You receive an immediate income tax deduction for a portion of your gift. In most cases, you avoid capital gains tax liability and gifts to the fund are irrevocable. • LIFE INCOME TRUSTS Life income trusts are similar to pooled income funds but have two major differences. First, the trust is created by you and its assets consist only of the funds or property you contribute (generally $100,000 or more). Second, you set the amount of income you will receive rather than receiving the pro rata share of the pooled income fund. There is also much more flexibility in the type of property that can be donated. For example, real estate may be held by the trust and municipal bonds may be used. You can create a life income trust to provide either a fixed amount (called a Charitable Remainder Annuity Trust) or variable level of income (called a Charitable Remainder Unitrust). • CHARITABLE LEAD TRUST The charitable lead trust allows you to set aside assets for charitable use for a limited period. Your gift is invested to provide income to the organization and then the assets in the trust are returned to you or your family at a date you specify. Such a plan can be used to fulfill a gift pledge over a number of years while serving to reduce estate and gift taxes that might otherwise be due on assets given outright to children, grandchildren, or other loved ones. • WEALTH REPLACEMENT TRUST A wealth replacement trust is method of protecting the inheritance interests of your heirs while still providing a significant gift to the organization. Under this plan, you would contribute property or assets to the organizations either outright or through one of the other planned giving vehicles. Using the resulting tax savings, you would then purchase a life insurance policy with your heirs as beneficiaries. • LIFE INSURANCE If you own a life insurance policy that you no longer need, you might consider the organization the sole owner and beneficiary of the policy. You would receive and income tax deduction for roughly the cash surrender value of the policy. If the policy that is not fully paid, you may consider continuing to pay the premiums. You will receive a tax deduction for the annual premium amount. Life insurance may also be used to benefit heirs by replacing the value assets gifted to the organization. • BEQUESTS In planning your estate, you should remember that an outright bequest to the organization, as well as certain bequests in trust, are not subject to estate taxation. Your actual cost is less than the face value of your gift because of the tax benefits realized through charitable contributions. A bequest can take any of the following forms: (1) a specific bequest of a dollar amount or a particular securities or other property, (2) a residuary bequest of all or a portion of your estate, after the payment of specific amounts to other beneficiaries, (3) a contingent bequest to take effect only in the event that the primary beneficiaries under your will die before you, or (4) a testamentary trust, which takes the form of a Charitable Remainder Annuity Trust or Unitrust, the corpus of which will be paid to the organization upon the death of the trust's income beneficiary. Often the bequest can be arranged simply with the addition of a codicil amending your existing will. C ONC LUSION When contemplating a special gift to the organization, it is a good idea to notify the Palmer Trinity School Development Office of your intentions. It is expected that each donor will consult with his or her financial advisor before finalizing a major gift.

• Cover