Planned Giving Opportunities

What is a Planned Gift?

Planned giving is a method of supporting charities that enables donors to make larger gifts than they could afford to make directly. Some planned gifts provide a life-long income to the donor, others use estate and tax planning techniques to provide for charity and other heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.

Planned gifts may produce significant tax savings. They often help a donor avoid or stretch out payment of capital gains taxes, earn federal and state income tax deductions, reduce the size of the donor’s estate, and, if given to a Montana endowment, are eligible for the Montana Charitable Endowment Tax Credit.

Here’s a brief overview of the planned giving instruments available to Montana donors. For more information, contact your financial advisor or visit the Montana Community Foundation website.

Charitable Gift Annuity

Donor transfers cash or securities in exchange for charity’s promise to pay a fixed annuity to one or two individuals for life. The present value of the annuity is less than the amount transferred, creating a gift to charity.

Deferred Charitable Gift Annuity

Similar to a Charitable Gift Annuity except the payments to the annuitant(s) are deferred for a period of time. To qualify for the Montana Endowment Tax Credit, the annuity rate must be at least 5% and the annuity payments must begin within the life expectancy of the annuitant(s).

Charitable Remainder Unitrust

Beneficiaries receive a fixed percentage (minimum 5%) of the value of the trust assets as revalued every year (standard unitrust). Alternatively, trust may pay the lesser of the unitrust amount or the trust’s actual net-income (a net-income unitrust); make-up provisions permitted. When the trust ends, principal passes to one or more charities. Additional contributions possible.

Charitable Remainder Annuity Trust

Donor funds a qualifying trust under Code §664 providing a fixed annuity (minimum 5% of original value of principal) for one or more individuals. The trust may last for the lifetimes of the beneficiaries or a term of years (maximum 20 years). When the trust ends, principal passes to one or more qualified charities. No additional contributions permitted to trust.

Remainder Interests in Residencies and Farms

Donor deeds personal residence or agricultural property to charity and retains a life estate for one or more individuals or for a fixed term of years. A residence need not be the donor ́s primary residence. Transfer is not made in trust and may not include personal property.

Charitable Lead Trust

Reverse of the charitable remainder trust. The lead trust pays either an annuity or a unitrust amount to one or more charities during the trust term, remainder to donor or named beneficiary. Lead trusts can be set up during life (either as grantor or nongrantor trusts) or at death.

Pooled Income Fund

A donor’s gift is pooled in a fund with gifts from other donors. The donor or others they name receive the gift’s share of the income the fund earns each year for life. The gift’s share of the fund then goes to charity.

Paid-Up Life Insurance

Replacement value or the adjusted cost basis of the policy, whichever is less, when donor transfers all rights of ownership in the policy. No deductions where charity merely named death beneficiary.