Charitable bequests are gifts received after death, usually from an individual’s will or other estate-planning document.

Making a bequest to “YOUR ORGANIZATION” gives you:

• A relatively uncomplicated tool for philanthropy.
• The right to change your mind – you retain control of your assets and where they will go.
• A choice to employ financially prudent strategies in the distribution of your estate.
• The opportunity to honor philanthropic commitments you’d like to make beyond your lifetime.
• The choice to fund either the ongoing philanthropic activity of “YOUR ORGANIZATION” through an unrestricted gift or to establish a restricted fund to support a specific purpose.

Many people have no will, and when they die these opportunities vanish. If you die with no will or other estate plan arrangement, the state distributes all of your assets according to its own laws. Any particular arrangements you intended for family and valued causes will not take place.

To be effective, your will needs to clearly express your intentions and be drawn in accordance with appropriate state laws. You should seek a qualified estate-planning professional when arranging these important personal decisions. The following definitions and sample wording may be helpful as you and your advisors consider the bequest arrangements you want to make.

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Specific Bequest

A gift of a specific dollar amount ($25,000), a percentage (20 percent) or asset, such as a house, that is part of your estate.

Suggested Wording: I give, bequeath and devise (dollar amount, percentage amount or description of asset) to “YOUR ORGANIZATION”, a qualified 501(c)(3) organization, located at “YOUR ORGANIZATION” address, to be used for _____________________.

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Residuary Bequest

A gift of all or part of the property remaining in your estate after debts, expenses and specific bequests have been paid, usually stated as a percentage. For example, if you want to bequeath money to your spouse or children, a residuary bequest can make sure that “YOUR ORGANIZATION” receives the portion that you prefer after your spouse or children have received the money you want them to have.

Suggested Wording: I give, bequeath and devise (all or ___%) of the rest, residue, and remainder of property, both real and personal, wherever situated, which I may own or be entitled to at my death, to “YOUR ORGANIZATION”, a qualified 501(c)(3) organization, located at “YOUR ORGANIZATION” address, to be used for _________________.

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Contingent Bequest

A bequest that is contingent depends on a precedent event. For example, you leave money to a sibling, but in the event that your brother or sister dies before you do, the bequest would then benefit “YOUR ORGANIZATION” and make sure that your wishes are carried out even if circumstances change.

Suggested Wording: I give, bequeath and devise to (name of person) the greater of $ (amount) or (___) percent of the residue of my estate. Should (name of person) predecease me, I direct this sum or percentage to “YOUR ORGANIZATION”, a qualified 501(c)(3) organization, located at “YOUR ORGANIZATION” address, to be used for ________________.

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Maximize the Giving Power of Your Gift

While specific bequests of fixed dollar amounts can appear significant at the time you draw up your will, they do not provide an opportunity for appreciation should the value of your estate increase over time. Furthermore, they will likely be subject to erosion of value over the years due to inflation. Consider the man whose will, signed in 1976, left $10,000 – a very generous gift at that time – to his alma mater. By the time he died in 2001, however, inflation had eroded that $10,000 to less than one-third of its 1976 value.

To avoid the above problem, you may instead want to consider a specific percentage bequest or a residuary bequest. These types of bequests allow your eventual gift to reflect, in proportion with other percentage or residuary bequests, any appreciation your estate experiences. This allows your original intention for “YOUR ORGANIZATION” to be honored without disturbing any of the plans you arranged for family and loved ones through similar bequest designations.

• Why Should You Consider A Charitable Bequest?

  • Creating your will or other estate plan arrangement is a momentous step in ensuring the future of family, friends and valued causes such as “YOUR ORGANIZATION”. With a charitable bequest you can:
    • Remain in control of your assets during your lifetime.
    • Incorporate charitable giving as part of the tax-wise planning of your estate.
    • Reduce your estate’s exposure to taxes.
    • Create a lasting tribute to honor family, friends and loved ones.
    • Continue your support of the values and causes you believed in during your lifetime.
    • Perpetuate the vitality and purpose of “YOUR ORGANIZATION’s” programs and mission by increasing its pool of unrestricted funds.

• An Illustration

  • Some years ago, when June and Jim Berger’s children were younger, the couple prepared a will to secure their children’s future if anything were to happen to them. That will specified guardians for the children and allocated money for the children’s education. Today, however, the children are adults, married and leading very successful lives. June and Jim’s will no longer reflects the current conditions or interests of their lives or those of their family.
       
    The couple intended to update their will, but have never taken the time to do so. When June’s cousin died unexpectedly without a will, they saw firsthand how a judge acting under state law impersonally distributed her assets. None of her assets went to any of her close friends or to the organization where she had volunteered for 15 years. This situation prompted the Bergers, with their attorney, to update their wills, and to include significant bequests to charities in addition to family and friends.
       
    Both Jim and June had been volunteer after-school tutors in an elementary school in their neighborhood. They were so impressed with the results they saw in the children that they wanted to make a bequest to programs that help children succeed in school. While they weren’t sure the same program would still be around at the time of their death, they knew that other such programs would be. Jim was aware that “YOUR ORGANIZATION” had funded after-school programs at the school where he volunteered, so he called the Foundation’s Donor Services Department, which put him in touch with “YOUR ORGANIZATION’s” program officer for education. After a friendly phone conversation, Jim felt assured that “YOUR ORGANIZATION” had a long-term commitment to programs that improve student achievement, so both the Bergers decided to include bequests to “YOUR ORGANIZATION” for that purpose. They trusted that “YOUR ORGANIZATION” would use their gifts wisely to support programs to help kids achieve in school.

• In Brief

  • Bequests are the most common planned gift. They give you:
    • The chance to change your mind should your circumstances change.
    • An opportunity to reduce possible estate taxes.
    • The full use of your assets as long as you live.