How do you want to be remembered? Do you want to have an impact for years to come? Do you want to support your favorite charity? Your legacy can live forever with a gift to The Rotary Foundation, which offers the following estate planning options.

Bequests

You can make bequests to the Foundation by naming it in your will or trust or by designating it as a beneficiary on bank or brokerage accounts, 401(k)s, individual retirement accounts, or life insurance policies. Bequests allow you to control and benefit from the specified assets during your lifetime. Though you won’t receive the income tax deductions that come with lifetime donations, charitable bequests can reduce the assets subject to estate taxes.

Daniel Bonyhadi, of the Rotary Club of East Fresno, Calif., USA, has named the Foundation’s Permanent Fund a major beneficiary in his will. (His wife, Lorna, has done the same.) Bonyhadi has worked on several international service projects and chairs District 5230’s Major Gifts Committee. The couple had a straightforward reason for including the Foundation in their wills, he says: “We wanted to make a difference after we were gone. The Rotary Foundation was the right organization to accomplish that.”

Income agreements

Income agreements allow you to contribute to the Foundation and receive payments from the assets you donate. These agreements are attractive for donors age 50 or older who wish to give US$10,000 or more to the Foundation but also desire income from these assets.

The Foundation offers several income agreements. Charitable gift annuities generate a tax deduction for a substantial part of the contribution, and you and a second beneficiary – a spouse or family member, for instance – receive fixed income payments for life. You can have the payments start immediately, or you can receive them later through a deferred charitable gift annuity.

Charitable remainder trusts are another option. These trusts allow U.S. citizens to transfer cash, securities, or real estate worth at least $100,000 to the Foundation. The resulting income tax deduction is based on a percentage of the gift’s initial fair market value, and you and your beneficiaries can choose to receive a fixed or variable annual income of at least 5 percent of the value of the trust. You can also decide whether that income will last for a predetermined period or for the beneficiaries’ lifetimes. These trusts can be ideal for generating additional income from highly appreciated assets without incurring the capital gains taxes you would pay if you sold the assets outside the trust.

“A charitable remainder trust is a wonderful tool in the right situation,” says Mike Dunlap, a certified public accountant and a member of the Rotary Club of Escondido Sunrise, Calif. He and his wife, Nancy, a member of the Rotary Club of Bonsall who’s also a certified public accountant, established a charitable remainder trust with the Foundation in 2005 and contributed two rental properties. Their value had appreciated significantly, and the Dunlaps faced considerable capital gains taxes if they sold the properties outright. By transferring the real estate to the trust, they avoided these taxes and received a substantial charitable deduction. The trust sold the properties and invested the funds for growth. Dunlap says that if the trust’s investments perform as expected, the couple will receive a much larger retirement income than if they had held the properties and continued to collect rent.

Donor advised funds

Donor advised funds allow U.S. citizens and U.S.-based groups affiliated with Rotary, such as clubs, to enjoy many of the benefits of a private foundation but with less expense and fewer administrative chores. The minimum initial contribution to establish a donor advised fund is $20,000 in cash or securities. Subsequent contributions must be at least $1,000.

You can create a fund through your will or trust, but lifetime contributions generate an immediate income tax deduction and are invested in professionally managed portfolios. The Foundation handles all record keeping for the account. Once the fund is established, donors can recommend issuing grants from the account to IRS-approved U.S. charities. So, clubs can use their fund to support some of their favorite local causes.

Group accounts continue in perpetuity, but individual donor advised funds are finite. For individual funds containing less than $150,000 at the donor’s or surviving spouse’s death, at least 50 percent of the remaining balance is transferred to the Foundation’s Permanent Fund. The rest is distributed to other donor-specified, IRS-approved charities. For accounts with more than $150,000 at the donor’s or surviving spouse’s death, at least 50 percent of the account’s value goes to the Permanent Fund, but the donor’s children can be named as successors permitted to take over the fund and make grant recommendations with the remaining balance. Upon the children’s deaths, at least 50 percent of the remaining funds are distributed to the Permanent Fund, and the rest go to other qualified charities.

Staffers are happy to discuss how to include the Foundation in your estate plan. E-mail plannedgiving@rotary.org, or call Karena Bierman, director of planned and major gifts, at 847-866-4458. Learn more about planned giving.