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Why Planned Giving?
Regardless of the size of your estate, proper estate planning is important to ensure that those assets you have spent a lifetime accumulating are distributed according to your wishes.
Planned gifts can offer many advantages:
- Reduce estate taxes
- Provide a life income stream
- Allow you to make a much larger gift than you thought possible
- Receive a current income tax deduction
- Reduce or avoid capital gains tax
- Support the vital work of the UMDF
Many people have included the UMDF in their estate plans without telling us. Surprises are always nice, but by informing us of your decision, we are better able to plan for the future. Of course, once you inform the UMDF, we would respect a wish to keep it anonymous.
How to make a Planned Gift
An attorney or financial advisor can help you develop a plan for making charitable gifts that complements your current investment and estate plans. He or she can help you determine:
- The appropriate gift level based on your circumstances
- The type of gift
- The tax implications of your gift
- How to best structure the gift to benefit both you and the United Mitochondrial Disease Foundation
Retirement Plan Assets
With the increase in the variety of retirement plan assets that people own, an important aspect of your estate planning should be making sure that the money invested in these accounts goes to the people or organizations you wish to receive them.
Examples of these different retirement plans include IRAs, pension plans, Koegh and 401(K) accounts. You should be aware that proceeds from these plans may be taxed up to 70 percent of their value if proper planning is not done! If you are contemplating a charitable gift in your estate plans, using assets such as those in retirement plans can maximize your donation while allowing other property that is not subject to some taxes to be passed to your beneficiaries.
The Pension Protection Act passed by Congress in August 2006 allows taxpayers to donate money to a charity directly from their IRA or Roth IRA accounts. The distributions will be tax-free and will avoid early withdrawal penalties. Taxpayers are allowed to donate up to $100,000 per year from their IRA.
Life Insurance
Life insurance can be a valuable tool in estate planning. By naming beneficiaries on policies, proceeds can be paid directly to that person or organization without having to go through the probate process. Another option is to make proceeds payable to a person's estate so it can be included in the total when specific or percentage bequests are made.
Life insurance also offers a wonderful way to make a charitable gift. Check with your agent to see which options would be best for you.
Gift Annuities
The UMDF has a charitable gift annuity program that can provide you with payments for the rest of your life, while ultimately making a gift to support vital programs helping those affected by mitochondrial disease.
Gift of Securities
While a gift of securities is not strictly an estate planning tool, there are advantages to this type of donation.
If you have owned stock for at least one year that has increased in value, you can donate that stock to the UMDF without having to pay capital gains tax on the increase. Additionally, there is an income tax charitable deduction equal to the full current market value of the securities (up to 30 percent of the donor's adjusted gross income). You can also use appreciated stock to fund a gift annuity, and tax benefits will vary.
NOTE: In order to receive the most favorable tax treatment, you should donate the securities to the UMDF, rather than sell the stock and donate the proceeds. If you would like more information on how to make this transfer, please contact us.
Wills
One of the most common ways to remember the UMDF and help us carry on our programs is to leave a bequest through your will. The following is suggested language to use in wills and a variety of other estate planning tools.
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Making a gift to the United Mitochondrial Disease Foundation, a 501(c)(3) nonprofit organization incorporated in the Commonwealth of Pennsylvania:
I give and bequeath the sum of $XXXX (or XX percent of my estate) to the United Mitochondrial Disease Foundation, 8085 Saltsburg Road, Suite 201, Pittsburgh, PA 15239, to be used for its general purposes.
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You may also give a particular asset ("my shares of XYZ stock...") or a portion of the residue of your estate after other bequests have been paid ("50% of the rest, residue and remainder of my estate...").
Trusts
There are several different types of trusts that can serve a variety of purposes. The advice of an attorney and qualified planner is necessary to assess your situation and decided which trust might best serve your goals. Please know, however, that it is easy to include a gift to the UMDF through your trust by using our legal name and address as suggested under Wills
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Charitable Remainder Trusts permits you to transfer highly appreciated, low yielding assets to an irrevocable trust managed by a bank or other trustee you may select. The trust pays you fixed or variable income of at least five percent for life or a period of years then passes the principal to the UMDF. Such gifts avoid capital gains tax, reduce estate taxes and allow the immediate sale and diversification of the gifted assets.
Charitable Lead Trusts are the opposite of Charitable Remainder Trusts. Instead of having income payments directed to the donor or other beneficiaries, payments are made to the UMDF for a specified number of years. After the term expires, the remaining principal is distributed to the beneficiaries designated by the donor. The Charitable Lead Trust is a popular tool for supporting charity, reducing estate taxes and passing assets to children or grandchildren.
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Pay or Transfer on Death Accounts
This estate planning tool can be an effective way to quickly transfer assets, such as bank accounts or a certificate, to the UMDF. It also allows you to change the beneficiary at any time. When establishing the account, tell your banking representative that you wish it to be a Pay on Death account (some banks may call these Transfer on Death accounts). They will ask you for the name of the person or charitable organization you wish to receive the property upon your death.
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