Planned Giving

Planned Giving for Financial Advisors

Glossary

Actuarial
As used in planned giving, the factors used to calculate the value of lifetime payments to individuals or Gaylord Hospitals.
Appreciated Property
Securities, real estate, or any other property that has risen in value since the benefactor acquired it. Generally, appreciated property held by your client for more than a year may be donated at full fair market value with no capital gains cost.
Annuity
A contractual arrangement to pay a fixed sum of money to an individual at regular intervals. A charitable gift annuity is a gift to benefit Gaylord Hospital that secures fixed lifetime payments to your client and/or another individual.
Adjusted Gross Income ("AGI")
The sum of an individual's taxable income for the year is the total at the bottom of the first page of I.R.S. Form 1040. Your client may deduct outright charitable cash contributions up to 50% of AGI and outright gifts of appreciated securities and appreciated property or other gifts "for the use of" Gaylord Hospital up to 30% of AGI. Any excess deduction may be carried over for up to five years following the year of the gift.
Attorney-in-Fact
An individual who is legally authorized to act on behalf of another by virtue of a power of attorney.
Appraisal
An assessment of the value of a piece of property. Benefactors contributing real or tangible personal property (art, books, collectibles, etc.) must secure an independent, qualified appraisal of the property to substantiate the value they claim as a charitable deduction.
Bargain Sale
When an individual sells property to a charity for less than its market value. Tax law considers this part sale and part charitable gift with tax benefits and capital gain apportioned to each part.
Basis
The benefactor's purchase price for an asset, possibly adjusted to reflect subsequent costs or depreciation. If your client buys stock for $100 per share, the cost basis in the stock is $100 per share.
Beneficiary
The recipient of a bequest from a will or a distribution from a trust, life insurance policy, or retirement plan.
Bequest
A transfer of property or cash to an individual or Gaylord Hospital under a will. A "bequest" may also refer more informally to an end-of-life distribution from a living trust, life insurance policy, or retirement plan.
Capital Gains Tax
A federal tax on the appreciation of a capital asset when it is sold.
Codicil
A simple amendment to a will that avoids the cost and complication of re-writing the entire will. The codicil must be signed and witnessed or notarized according to the formalities required by the state of domicile.
Cost Basis
See Basis, above.
Durable General Power of Attorney
A document by which an individual (known as the "principal") legally appoints another individual as her "attorney-in-fact" or "agent" for financial matters. The appointed person maintains the ability to oversee the principal's financial affairs even in the event of incapacity or disability.
Endowment Fund
The permanently held capital of a charity, the income (or a board approved spending policy of some percentage of the assets) from which is used to support ongoing projects and meet institutional needs.
Estate Tax
A federal tax on the value of the property transferred by an individual at his or her death (typically paid by individual's estate). Some states assess their own estate taxes as well.
Executor/trix or personal representative
The person named in a will or appointed by the probate court to administer the estate under the supervision of the probate court.
Fair Market Value
The price that an asset would bring in a sale from a willing seller to a willing buyer.
Grantor
The individual transferring property into a trust.
Health Care Power of Attorney
A document by which an individual known as the "principal" legally appoints another individual as her "Attorney-in-Fact" or "Agent" for health care decisions. The agent can make decisions about the principal's medical treatment in the event she is unable to do so.
Heir
The individual who is entitled to inherit property from a deceased individual in the absence of a will distributing the property otherwise. Every state has an intestacy statute defining who qualifies as heirs.
Income Interest
In a trust, the right to receive payments from the trust for life or a term of years.
Income in Respect of a Decedent (IRD)
Taxable income earned by a decedent that was not yet received before death. The most common IRD assets are IRAs and qualified retirement plans. Income tax will be assessed on those assets after the decedent's death and in the hands of beneficiaries.
Intestacy
When a person dies without a valid will, state laws will determine how the individual's probate estate will be divided by any heirs. If there are no heirs, then the state can claim any remaining probate assets.
Joint Ownership
The ownership of property by two or more persons. If owned with "rights of survivorship," the property passes by operation of law to the surviving joint owner on a joint owner's death. In that case, the descendant's will does not control disposition of the property.
K-1 and 1099-R
The IRS forms sent to life-income gift income beneficiaries detailing how payments they received from their gifts during the year will be taxed.
Life Income Gift
A planned gift that makes payments to the donor and/or other beneficiaries for life or a term of years, then distributes the remainder to charity.
Living Trust
Also "Revocable Living Trust." A trust that is created by a living individual (grantor) that is used to manage assets for the benefit of the grantor and/or other persons. At the grantor's death the assets in the trust are passed to named beneficiaries, either outright or in further trust.
Living Will
A legal document that allows an individual to indicate whether or not she would like her life to be artificially prolonged in the event she is in a terminal or persistent vegetative state. A living will is often used in conjunction with a health care power of attorney, which appoints someone to make health care decisions on an individual's behalf.
Personal Representative
See Executor, above.
Planned Giving
Also "Gift Planning." The process of charitable giving in light of financial, estate and/or tax planning. Such gifts often require the assistance of an attorney, financial professional or planned giving officer.
Probate Court
The court that determines the validity of a will and provides judicial oversight in the distribution of the estate. The "probate process" or "going through probate" refers to this court-supervised process. If there is no valid will, the probate court will appoint an administrator of the estate to facilitate the estate's distribution in accordance with state intestacy law.
Qualified Appraisal
A written appraisal prepared by a knowledgeable professional to determine the fair market value of property (other than marketable securities) donated to a charity. If the donor wishes to use the value of the donated property for a charitable income tax deduction, the appraisal must be obtained by the donor and attached to the tax return on which the deduction is claimed, if the property has a value of $5,000 or more. There are stringent educational requirements that a proposed "qualified appraiser" must meet, and the qualified appraisal must be prepared according to a detailed list of requirements set forth in the Internal Revenue Code and accompanying U.S. Treasury regulations. When a qualified appraisal is required, the opinion of value of a curator, artist, real estate broker, or similar individual is not sufficient to support a claimed charitable deduction.
Remainder Interest
In a trust, the portion of the principal left after the payment interest has been paid to the beneficiary(ies). A charitable remainder trust makes distributions to one or more individuals and then passes its remainder to charity. A gift of a remainder interest in real estate allows the entire property to pass to charity once the life estate holder has died.
Related-Use Rule
A donor can receive an income tax charitable deduction for the full fair market value of donated tangible personal property during life only if the property can be used by the charity in a way that is related to its tax-exempt purpose. Otherwise the deduction is limited to the donor's cost basis. The related-use rule does not apply to transfers at death.
Remainder Beneficiary
A legal term for the individual or Gaylord Hospital that receives the trust principal after the payment interest has been satisfied.
Residuum
The portion of a charitable gift annuity that remains for charity once the annuity payments terminate.
Revocable Living Trust
Also "Living Trust." A trust that is created by a living individual (grantor) that is used to manage assets for the benefit of the grantor and/or other persons. At the grantor's death the assets in the trust are passed to named beneficiaries, either outright or in further trust.
Right of Survivorship
A type of titling arrangement by which assets will automatically transfer from one person to another upon the death of the first person. See Joint Ownership above.
Stepped-Up Basis
When an individual inherits property from a decedent, the property's cost basis is stepped-up to its fair market value on the date of death. The beneficiary receiving the property would avoid any capital gains tax if he/she were to immediately sell the property.
Tangible Personal Property
Artwork, collectibles, equipment, and other three-dimensional items. Tangible personal property does not include securities, business interests, or other interests represented on paper or electronically.
Taxable Estate
The total value of a deceased person's assets that are subject to taxation - minus liabilities and minus the prescribed tax-deductible portion of assets left behind by the deceased.
Testamentary Trust
A trust that is created and goes into effect only when an individual dies. Such a trust is usually set up under the terms of a will.
Testator/Testatrix
The individual making a will.
Trust
A separate legal entity created when a grantor transfers property to the care of an individual or organizational trustee for the benefit of one or more beneficiaries.
Trustee
An individual or Gaylord Hospital exercising fiduciary power to carry out the wishes of the person who established a trust (the "grantor") as stated in the trust document.

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