Living Gifts:

Living gifts are made during a donor’s lifetime, when the donor can see the benefit of their gifts. With living gifts, all rights associated with the assets gifted pass to SUUF or the Endowment Fund at the date of the gift.

Tool 1: Naming Summit or the Endowment Fund as the recipient of a charitable rollover from an IRA

Donors 70 ½ or older can give up to $100,000 from their IRA to Summit or the Endowment Fund. The donation satisfies the donor’s required minimum distribution (“RMD”) for the year and is not counted in their taxable income.

Tool 2: Donating appreciated securities to Summit or the Endowment Fund

There can be tax benefits to donating appreciated securities to Summit or the Endowment Fund. If the securities are worth less than their original costs, it is usually better to sell them and make a charitable gift using the cash proceeds.

The donor usually receives a charitable deduction for the full market value of appreciated securities in the year of transfer, and pays no capital gains tax on the sale of the appreciated securities. If the securities are held by the donor’s financial services provider, they may instruct them to electronically transfer the securities to the Summit Unitarian Universalist Fellowship brokerage account; contact information for the brokerage account may be obtained from Summit’s Administrator.

If there is no readily available market, Summit may need to perform due diligence prior to accepting the gift, and the donor will be asked to bear the cost of that review.

Tool 3: Life Insurance Policy with a Cash Value

The donor can name Summit or the Endowment Fund as a beneficiary of their whole or universal life insurance policy; this, however, does not give the donor an income tax deduction. If the donor has an unneeded traditional life insurance policy, they may irrevocably transfer ownership of that policy to Summit and designate Summit as the sole beneficiary, making it irrevocable and a current charitable gift with possible savings in income taxes roughly equal to the cash value at the time of the gift. If such an action would result in Summit having to pay continuing premiums, the donor should consult with Summit prior to executing this gift so that Summit can evaluate its financial impact on Summit.

Tool 4: Real Estate

Offers of gifts of real estate will be considered on a case-by-case basis. Generally, Summit will sell all gifts of real estate and use the proceeds according to the donor restriction.

Tool 5: Tangible Personal Property

The donor can claim a charitable income deduction for the full market value of the property only if it is related to the mission of the charitable beneficiary. If it is unrelated, or is created by the donor (such as artwork), then the donor’s deduction is limited to their original costs.

Split Interest Gifts

A split-interest gift is any gift in which a portion of the gift is assigned to charity and a portion benefits the donor or his/her designee.

Tool 6: Designating Summit or the Endowment Fund as a beneficiary of a charitable gift annuity

Through the use of a charitable gift annuity or charitable remainder trust (Tool 7), a donor may make a charitable gift to Summit while receiving lifetime income for themselves and their spouse or other beneficiary. Charitable gift annuities with Summit or the Endowment Fund as a charitable beneficiary can be arranged through the Unitarian Universalist Association (“UUA”). Through a simple contract, the donor agrees to make a donation of cash, stocks, or other assets with value of at least $10,000 to the UUA. In return, the UUA agrees to pay the donor (and someone else, if the donor chooses) a fixed amount each year for the rest of their life and then give Summit the remaining value. A charitable gift annuity is a contractual agreement between the UUA and one or two donors. In exchange for a donation of $10,000 or more, the Association promises two things:

• To pay a fixed dollar amount to one or two people for as long as they live or for a set number of years; and, at the end of the contract,
  
• To deliver what remains of the original gift to the charitable beneficiaries chosen by the donor(s).

These payments are not affected by ups and downs in the economy. The donor generally receives a deduction for the charitable gift portion of the annuity (usually the gift amount minus the present value of the annuity payments) and part of the lifetime payments may be tax free. If the annuity is funded by appreciated property, the donor may also avoid capital gains tax on the transfer. The payout rate is determined by annuity rate tables prepared by the American Council on Gift Annuities.

The UUA has a minimum age or average age requirement of 65 for beneficiaries of annuities depending on whether the annuity payments begin immediately or whether they begin later. Generally, the older beneficiaries are at the start of their payments, the higher the payments.
The UUA asks that at least 25% of the annuity be designated for the UUA to assist with the cost of annuity administration, but this is not mandatory. If a donor is interested in recognizing Summit through a charitable gift annuity, they should communicate with the UUA Office of Legacy Gifts, (888) 792-5885 or giftplans@uua.org

Tool 7: Naming Summit or the Endowment Fund as a beneficiary in a charitable remainder or lead trust

A charitable remainder or lead trust, unlike a beneficiary designation in a will, is irrevocable; assets transferred to the trust cannot be “taken back” by the donor. Charitable trusts split the income and remainder interests of the assets in the trust between non-charitable beneficiaries and charitable organizations. There are a number of different kinds of charitable trusts, including:

• A charitable remainder annuity trust, in which the trust pays a non-charitable beneficiary individual a fixed dollar amount every year with the remainder going to the charity when the trust is terminated.
  
• A charitable remainder uni-trust, in which the trust pays an individual a fixed percentage of the trust assets as revalued annually with the remainder going to the charity.
  
• Pooled-income fund, in which the charity co-mingles the donations of many people and distributes the actual earnings of the fund to beneficiaries proportionately, with the remainder going to the charity. The UUA has a pooled-income fund invested in stocks, bonds, and other securities with the possibility for increases over time.
  
• A net income uni-trust, in which the trust pays an individual only to the extent that, after expenses, it has income to distribute.
  
• A charitable lead trust pays income from the trust to the charity until the trust is terminated, when the remainder passes to a non-charitable beneficiary. A lead trust enables the donor to make payments for charitable purposes for a period of time they choose; the assets in the trust are then returned to the donor or the designated beneficiaries. This can delay an inheritance while also funding the donor’s charitable priorities.

Summit or the Endowment Fund would be happy to be a beneficiary of a charitable trust arranged by the donor’s legal counsel. Alternatively, a charitable trust with Summit or the Endowment Fund as a charitable beneficiary can be arranged through the UUA. Donors interested in recognizing Summit or the Endowment Fund through a charitable trust should communicate with the UUA Office of Legacy Gifts, (888) 792-5885, or giftplans@uua.org.

Tool 8: Retained Life Estate

A donor can gift their home or other real estate to a charity yet retain the right to continue living in the home until the end of the term of the retained life estate, usually the end of their lifetime. The donor may receive an income tax deduction in the year they make the gift for the charitable portion of the gift based on a qualified, independent appraisal. The donor may also save on capital gains and estate taxes. The donor is responsible for upkeep costs and real estate taxes while they retain the property.

End of Life Gifts

Tool 9: Leaving Summit or the Endowment Fund a bequest in a will

By leaving Summit a bequest in a will, a donor can leave a legacy without giving up current assets. Until the will goes into effect, the donor is free to alter their plans, so a beneficiary designation in a will is revocable. These gifts can include cash, securities, or property. There is no lifetime income tax deduction, but the estate may be entitled to an estate tax charitable deduction for the value of the gift (if the estate is subject to estate tax). Capital gains taxes may also be avoided if the bequest is funded with appreciated property. A bequest can be an unrestricted or restricted gift to Summit and thus available for current use or a gift to the SUUF Endowment Fund, which will benefit Summit in future years. It can be in a specific dollar amount, a percent of an estate, or a residual bequest from the remaining assets in an estate after all other specific bequests and settlement costs are satisfied.

Donors should share the following suggested bequest language with their attorney to assist in drafting a will or codicil or to designate Summit Unitarian Universalist Fellowship or the Endowment Fund as a beneficiary of an estate.

Unrestricted Gift

I give, devise, and bequeath to the Summit Unitarian Universalist Fellowship in Santee, California, (___% of my gross estate) or (the sum of $______) for its general purposes.
Endowment Gift
I give, devise, and bequeath to the Summit Unitarian Universalist Fellowship Endowment Fund in Santee, California (___% of my gross estate) or (the sum of $_____) to be used for endowment for the purpose of generating unrestricted support.

Other restriction

If, after consultation with Summit, a donor chooses to make a bequest to Summit with a restriction other than those listed above, the donor should include the following wording or equivalent in their will:
If, in the future, it is the opinion of the Board of Directors of Summit Unitarian Universalist Fellowship that all or a part of this bequest cannot be usefully applied to such purpose, it may be used for any related purpose which, in the opinion of the Board of Directors of Summit, will most nearly accomplish my wishes.

Tool 10: Naming Summit or the Endowment Fund as a beneficiary in a living trust

Assets (including securities and other property) can be placed in a living trust and managed by the donor. When the trust ends (usually at the end of one’s lifetime), the assets are managed or distributed as the trust directs, often avoiding the probate process. The trust provisions may usually be changed or cancelled at any time during life. Therefore, a living trust is a revocable trust. A living trust is created during the donor’s lifetime, with a “pour-over” will to designate the assets to be placed in the trust and distributed to specific individuals or organizations upon termination of the trust. The trust would then have wording as described in Tool 9.

Tool 11: Naming Summit or the Endowment Fund as a beneficiary on life insurance

The beneficiaries of life insurance are determined—not via a will—but by the insurance company beneficiary designation forms. Life insurance passes to beneficiaries outside of probate, and usually free of estate taxes. Naming Summit as a beneficiary of a life insurance policy is a revocable gift, as the donor can change the beneficiary until the policy goes into effect.

Tool 12: Naming Summit as a beneficiary of a 401(k) or 403(b)

Leaving a portion of retirement assets to Summit can help get the most value from an estate and protect heirs from taxes. The reason is that retirement plan distributions are subject to income taxes when paid out to an individual. This can reduce the amount received by heirs by up to 35 percent. In contrast, tax-exempt charities like Summit are eligible to receive the full amount of the gift at the donor’s death without any federal income taxes. The beneficiary of a pension account, 401(k), 403(b), or IRA is determined– not via a will—but by the beneficiary designation forms. Summit or the Endowment Fund may be named as a beneficiary of a company pension or profit sharing plan, or of a 401(k) or 403(b). The naming of Summit as a beneficiary of a pension plan and the amount can be arranged by providing the plan administrator of the pension plan a change of beneficiary form.

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