If your gift is to be made in cash, you can designate a dollar amount for the Broward Health Foundation, or you can specify a percentage or fraction of your estate. The latter choice provides a hedge against inflation and unforeseen shrinkage while assuring that your heirs receive their proportionate share of the estate.

You can name the Broward Health Foundation as the remainder beneficiary of your estate. The Broward Health Foundation would receive the residual amount only after specific sums have been paid to individual beneficiaries.

You can make a contingent bequest by naming the Broward Health Foundation to receive certain assets only if a named individual, such as a spouse, doesn't survive you. This offers a way to put a loved one's security first.

You can specify a non-cash gift of securities, real estate, or tangible personal property (such as art or antiques).

Gifts of unrestricted funds are the most helpful to the Broward Health Foundation, but you may designate your gift for a specific purpose if you wish.

Charitable Gift Annuities

A charitable gift annuity is a contract under which a charity, in return for a transfer of cash, marketable securities or other assets, agrees to pay a fixed amount of money (payment) to one or two individuals (beneficiaries or annuitants), for their lifetime. The contract is between the donors and the issuing charity, where the donors transfer property (cash, securities, and real property) in exchange for a fixed dollar payment during their lifetime. The issuing institution guarantees the income, as it becomes a legal obligation of the charity.

For example, Mr. and Mrs. Blue, both age 70, donate $50,000 in cash to the Broward Health Foundation to fund a charitable gift annuity. For the duration of both of their lives, the annuity will provide them with fixed annual payments of $2,300 (4.6% payout rate). More than $1,800 of this will be treated as tax-free income, and the remaining $500 as ordinary income, annually for the next 20.5 years. After 20.5 years the entire amount will be treated as ordinary income. The Blues’ current income tax deduction will be nearly $13,000, and the Blues have up to six years to use this deduction.

Another example would be Mrs. White, age 65, makes a gift of $50,000 of stock to the Broward Health Foundation to fund a charitable gift annuity with a cost basis of $10,000. For the duration of her life, the annuity will provide her with fixed income payments of $2,350 (4.7% payout rate). Of this amount, $361 will be treated as tax-free income, $1,446 as capital gain income, and $543 as ordinary income annually. Mrs. White’s current income tax deduction will be more than $14,000, and Mrs. White has up to six years to use this deduction. Total reportable capital gain of $28,776 must be reported over 19.9 years, the expected lifetime of a donor age 65. After 19.9 years, the entire annuity becomes taxable as ordinary income.

Charitable Remainder Trusts

This life income plan is created by transferring assets to a trust that pays you (and other beneficiaries, if you wish) or a not-for-profit organization income for life or a number of years. At the end of the trust, the remaining trust assets are either transferred to the Broward Health Foundation, or, in the case of the lead trust, either back to the funder or their heirs. A bank or trusted advisor can serve as trustee.

The type of charitable remainder trust you choose determines your annual payments:

1. Charitable Remainder Annuity Trust

The charitable remainder annuity trust pays you a fixed dollar amount annually for life. The fixed payments are determined by the payout percentage selected at the beginning of the trust. You can claim a charitable deduction on your income tax form the year that you create the trust. The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.

For example: Mrs. Crosby irrevocably transfers $100,000 to create a charitable remainder annuity trust that will provide her with life income payments. Included in the trust agreement is the stated payout percentage of seven (7%). She will receive $7,000 annually for her life ($100,000 x 7%). If income earned by the trust exceeds the fixed payment of $7,000, the excess is reinvested.

2. Charitable Remainder Unitrust

The charitable remainder unitrust pays you a fixed percentage of the fair market value of the trust assets, as revalued each year. Like the annuity trust, you can claim a charitable deduction on your income tax form the year that you create the trust. The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.

For example: Mr. Stills irrevocably transfers $100,000 to create a charitable remainder unitrust that will provide him with life income payments. The trust agreement provides that he will receive six percent (6%) of the fair market value of the assets each year. The first year he receives $6,000 (100,000 x 6%). One year later the trust assets are valued at $120,000, so he is paid $7,200 ($120,000 x 6%). If the trust assets are worth $110,000 at the beginning of the next year, he will receive $6,600 ($110,000 x 6%); and so on each year. If trust income exceeds the stated payout percentage, the excess is added to the unitrust assets and reinvested.

3. Charitable Lead Trust

Under this plan, you irrevocably transfer assets to a trustee and provide that payments be made to us for a certain number of years (or until the end of your or another’s life). Then the principal is returned back to you (Grantor) or distributed to your children, grandchildren, or other heirs (Non-Grantor) at greatly reduced gift-and estate-tax rates and sometimes escapes them altogether.

For example: Mrs. Nash funds a non-grantor lead trust with $1,000,000 and stipulates that this organization is to receive $80,000 per year for fifteen (15) years, after which the remaining principal will be distributed to her two (2) children. She will report a taxable gift of only $202,300. The difference ($1,000,000 - $202,300 = $797,700) is a charitable gift-tax deduction. If she had simply given the $1,000,000 to her children, the entire amount would have been taxable.