Generational giving through retirement plans, life insurance, and meaningful bequests

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Generational giving through retirement plans, life insurance, and meaningful bequests

August is national Make a Will Month. You’ve likely already worked with your advisors to establish an estate plan, including a will and even a trust. Still, this is a good time of year to review your plan in case things have changed.

As you review your estate plan, consider whether your documents are aligned with your philanthropic intentions, especially if you’ve captured your philanthropic intentions through one or more funds at The Community Foundation. A fund at The Community Foundation can be an ideal recipient of estate gifts through a will or trust, or through a beneficiary designation on a qualified retirement plan or life insurance policy.

In particular, bequests of qualified retirement plans can be extremely tax-efficient. This is because charitable organizations such as The Community Foundation are tax-exempt. This means the funds flowing directly to your fund at The Community Foundation from a retirement plan after your death will not be reduced by income tax. This also means the assets will not be subject to estate tax.

Don’t overlook life insurance, either. Not only are you able to designate a fund at The Community Foundation as the beneficiary of a life insurance policy, but in some cases you also may elect to transfer actual ownership of certain types of policies. For example, if you were to make an irrevocable assignment of an eligible whole life policy to your fund at The Community Foundation, a tax-deductible gift of the cash value of the policy occurs at the time of the transfer. A gift like this could potentially ease your income tax burden, especially if the Foundation continues to own the policy and you make annual tax deductible gifts to cover the premiums.

The Community Foundation makes it easy for you to work with your advisor to draft bequest terms in legal documents, including beneficiary designations of retirement plans and life insurance policies. Please ask your advisor to contact our team for the exact language that will ensure alignment with your intentions. In many cases, anytime during your lifetime, you may even update the terms of a fund at The Community Foundation that you’ve designated to receive a bequest upon your death.

Learn more at www.tcfhr.org, email Revlan at [email protected], or give us a call at 540-432-3863.

 

Playbook: Helping clients organize their giving through a donor-advised fund

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Picture this: Your clients will arrive in 15 minutes. You’re reviewing the file. Everything is in order. The estate planning documents are up to date, you’re ready to share the latest investment results, and you are prepared to debrief the 2021 tax season and make tax planning recommendations for the remainder of this year. It sounds pretty typical up to this point, right?

As you continue to scroll through the materials, you see the names of several charitable organizations that your clients have supported every year for at least a decade. Ah ha! This is an opportunity to add even more value to your clients. Easy for a busy advisor to overlook, charitable giving habits are actually an important window into helping a client make planning decisions around their philanthropic intentions.

Here’s a simple playbook to guide you through a client conversation to begin establishing a charitable giving plan using a donor-advised fund at The Community Foundation.

  • Call your clients’ attention to their charitable giving history. They might not even be aware of how much they are giving or how long they’ve been supporting their favorite charities.
  • Gather more information about why the clients support those particular causes. Family tradition? Past involvement as a beneficiary of an organization’s services? Desire to impact a particular area of need?
  • Talk with your clients about their community involvement. Do they serve on any boards of directors? Do they volunteer at local organizations?
  • Review any charitable giving provisions in the current will or trust. Are the clients leaving a bequest to favorite charities?
  • Ask your clients if they’ve ever considered organizing their giving through a donor-advised fund. If they are not familiar with donor-advised funds, perhaps offer a quick primer, and certainly offer to introduce the client to a member of The Community Foundation team.
  • Briefly mention that a donor-advised fund can be an effective alternative to a private foundation, thanks to fewer expenses to establish and maintain, maximum tax benefits (higher AGI limitations and fair market valuation for contributing hard-to-value assets), no excise taxes, and confidentiality (including the ability to grant anonymously to charities).
  • Also mention that a donor-advised fund at The Community Foundation is frequently a more effective choice than a donor-advised fund offered through a brokerage firm (such as Fidelity or Schwab). That’s because, at a community foundation, the donor is part of a community of giving and has opportunities to collaborate with other donors who share similar interests. In addition, the donor is supported in strategic grant making, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference.

Want to learn more? Call The Community Foundation at 540-432-3863 or email Kristin Coleman at [email protected]!

Employment Opportunity at TCFHR

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The Community Foundation of Harrisonburg & Rockingham County is currently hiring. For more information review the recent job posting.

2017 Annual Report

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Learn More About a 65% Virginia State Tax Credit Opportunity

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The Virginia Department of Education (VDOE) Tax Credit Program is a way to support educational opportunities for local students and receive a 65% Virginia state tax credit on top of current state and federal charitable deductions. These state tax credits may be used in the tax year they are issued.

 

This program is similar to NAP credits, but is for individual or business donors interested in supporting scholarships at private K-12 schools in Virginia. Donations provide scholarship funds to support students of families that meet financial need criteria. The credits may not exceed the tax liability, but can be carried over for five succeeding years.

 

This year, the state has authorized up to $25 million in Education Improvement Tax Credits. The credits are readily available, but December 14th is a critical deadline to get this done for calendar year 2016 tax filings. It takes up to 2 weeks to receive the authorization allowing the taxpayer to make a qualified donation. Please note that donation checks may not be written before authorization is received.

 

The Community Foundation of Harrisonburg & Rockingham County is an approved scholarship foundation for the Virginia Department of Education (VDOE). Our staff will be glad to help you work through the process, and we can expedite application for these credits by sending forms electronically to the state. Program details and the Preauthorization Form can be found on the Virginia Department of Education website.

 

Please contact Ann at 540-432-3863 or [email protected], if you have questions regarding this program, or if The Community Foundation staff can be of assistance in any way.

Giving and Happiness

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Can money buy us happiness? I think most of us would say no. But what about gifts to others? At the Community Foundation, we believe that giving not only strengthens and improves our community but giving to others makes us happy. We see it everyday as we work with donors to make their philanthropic goals a reality. Michael Norton, Associate Professor of Business Administration at Harvard Business School has researched this phenomenon and agrees. According to Dr Norton, spending on others makes us think differently about our money and ultimately makes us happier. Check out his recent story on the TED Radio Hour on NPR:


So if giving makes us happy, can we take that a step farther and say that local giving has a two-fold benefit for our community: 1) it provides much needed funding for services and other community improvements and 2) community members are happier in general. I don’t know about you but I think a happier community is a better community.

Not sure where to give or how to give? The Community Foundation of Harrisonburg & Rockingham can help. We offer many ways to give back to your community no matter the dollar level. Check out our current Community Needs Listing where we have compiled a list of needs from our local nonprofit organizations. Please give us a call at 432-3863 if you would like more information on fulfilling a need in our community.

IMPACT Harrisonburg, a giving circle for professionals in the 20s, 30s, and 40s, provides a great way to give to others. Each member of the giving circle gives an amount based on age and collectively the group decides which local nonprofits will benefit. Not only do members benefit by giving their money to others but they are part of a collaborative effort that is making a difference in our community. Last year the group gave almost $15,000 to local nonprofit On The Road Collaborative to provide after school education and support for at-risk middle school children. Voting for a grant recipient for 2016 will start at the end of May. Don’t miss your chance to be a part of this exciting new group in Harrisonburg and Rockingham County. Here’s a link to more information on IMPACT.

Contact me at the Community Foundation with questions or if you would like additional information.

Melissa
[email protected]
432-3863

Community Foundation office closing early on Dec. 31

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The Community Foundation of Harrisonburg & Rockingham County will be closing its office early on Thursday, December 31, 2015. Our office hours for the remainder of 2015 are as follows:

Tuesday, December 29                 9:00AM – 5:00PM

Wednesday, December 30           9:00AM – 5:00PM

Thursday, December 31               9:00AM – Noon

Friday, January 1                          Closed

 

We appreciate your investment in our community and are most grateful for your support of our work during the past year. We look forward to working with you in 2016 as we ‘Dream. Share. Build. OUR COMMUNITY.’

President Signs IRA Qualified Charitable Distribution into Law

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On December 18, Congress passed the PATH Act, which renews and makes permanent the IRA Qualified Charitable Distribution provision of 2006.  This provision makes it easier for Americans to give to causes they care about and will help local charities strengthen their communities by allowing individuals to roll over up to $100,000 annually from an Individual Retirement Account (IRA) to charity without being federally taxed.

Click here to see the announcement from the Council on Foundations.

Millions of Americans continue to save pre-tax dollars in their IRAs. The law allows taxpayers 70 ½ and older to share their wealth by giving retirement savings directly to charity—and bypassing income tax.  (source: http://www.ici.org/research/stats/retirement/)

Annually, holders of traditional IRAs who are at least 70½ years old can make direct charitable transfers up to $100,000. Individuals may exclude the amount distributed directly to an eligible charity from their gross income. The Community Foundation of Harrisonburg & Rockingham County can help donors execute the transfers and choose from several charitable fund options for their gift.  Please note that Donor Advised Funds do not qualify for tax-free IRA transfers.

Some charitable fund options at The Community Foundation of Harrisonburg & Rockingham County that do qualify include:

Field of Interest Fund—Connecting personal values to high-impact opportunities.

IRA transfers to Field of Interest Funds allow donors to target gifts to causes important to them: arts, education, neighborhood revitalization, youth welfare and more.  The Community Foundation of Harrisonburg & Rockingham County awards grants to community organizations and programs addressing the donor’s specific interest area.

Designated Fund—Helping local organizations sustain and grow.

IRA transfers to Designated Funds allow donors to support the good work of a specific nonprofit organization—a senior center, museum or any qualifying nonprofit charitable organization.

The Community Endowment Fund – Meeting ever-changing community needs

IRA transfers to the Community Endowment for Harrisonburg & Rockingham County address a broad range of current and future needs. The Community Foundation asks local nonprofit to submit a description of their needs each year as part of the Community Needs Listing process.  Grants from the Community Endowment are awarded annually to nonprofits on this listing to help meet the needs of our community.

Call The Community Foundation of Harrisionburg & Rockingham today at (540) 432-3863 to find out more about the IRA Qualified Charitable Distribution and how it can benefit our community!