Gift & Estate Planning

Case Study

The following is an illustration of how this type of donation works.

The Challenge: Each year, for many years, Jerry has written a $1,000 check to a qualified charitable organization. Jerry looks forward to making the donation, and each year the organization appreciates his generosity. But Jerry is getting older, and he thinks about what will happen after he dies to the programs made possible through his generosity.

Quick Tip

There are many variations on how to set up an endowment. There also may be minimums associated with this type of gift. Contact us before making such an arrangement so we can help you, with no obligation.

The Solution: Jerry's financial advisor suggests that Jerry consider creating an endowment, a type of gift that would allow his generosity to continue forever. To establish an endowment, Jerry makes a lump $25,000 donation, which the organization invests. The organization only uses a portion (e.g., 4 percent) of the fund to support the program of Jerry's choice. The remainder is reinvested in the fund, which allows it to grow and support annual payouts indefinitely. This generous arrangement replaces Jerry's $1,000 annual gift, assuming 4 percent ($1,000) is used by the fund yearly. By establishing the fund now instead of through his estate, Jerry is able to witness his generosity in action.

The Benefits: Jerry earns a $25,000 income tax charitable deduction on his taxes this year. The donation also reduces the size of his taxable estate at death. The organization receives the benefit of Jerry's generosity forever.

Your Next Steps
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Action Items

The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.