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Gift Plans

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You can scroll down through this page to review the various Gift Plan options, or click on any of the following links to jump to an individual plan description.

  1. Bequests
  2. Charitable Gift Annuity
  3. Charitable Lead Trusts
  4. Charitable Remainder Annuity Trusts
  5. Charitable Remainder Unitrusts


1. Bequests   
  • You can provide now for a future gift to Hanul Family Alliance by including a bequest provision in your will or revocable trust.
  • Your will or trust directs assets to your heirs.
  • Your will or trust directs a bequest to Hanul Family Alliance for the purpose(s) you specify.


Benefits:

  • Your assets remain in your control during your lifetime.
  • You can modify your bequest if your circumstances change.
  • You can direct your bequest to a particular purpose (be sure to check with Hanul Family Alliance to be sure your gift can be used as intended).

Many people would like to help strengthen the long-term viability of Hanul Family Alliance but feel they cannot afford to make such a gift today. A bequest by will or revocable Trust can be tailored to complement your personal lifestyle and financial goals and also support Hanul Family Alliance. If you have not already done so, please consider putting Hanul Family Alliance in your will or revocable trust.

If you include Hanul Family Alliance in a bequest provision, please notify us so that we ensure your wishes can be fulfilled. Your notification will be treated confidentially.

What are the advantages of making a bequest?

  • it is not payable until death, so it does not affect your assets or cash flow during your lifetime.
  • It is private - your will is not filed or made public until your death.
  • It is revocable - you can change the provisions in your will or trust at any time until death.

What is the best way to include Hanul Family Alliance in my will?

When including a provision for us in your will, you will want to make sure that your intention is stated clearly and that you have our correct name and address. It would be prudent if you or your adviser calls us before drafting the document to ensure that the information you are including is accurate.

Here are some of your options:

  • How will your gift be used: You may opt to designate a particular program at Hanul Family Alliance as beneficiary of your gift, or you may leave your gift to be used at the discretion of our Board of Directors. (By leaving your gift unrestricted, you leave open many doors of opportunity. Of course, the choice is entirely yours.)
  • What asset should you use: You can give almost any kind of asset through a bequest, including cash, securities, an interest in real estate (such as a residence), tangible personal property (such as works of art or antiques) or the remainder of your IRA, Keogh, tax-sheltered annuity, qualified pension or profit-sharing plan.
  • What priority will the gift have: You can decide whether we will benefit outright through your will or only after other conditions are met, such as the distribution of bequests to heirs and other loved ones.
  • Will your gift be permanent: You even have the option of “endowing” your gift to provide a lasting financial resource. Because we never spend the principal of an endowed gift, there is always income to support our programs and projects.

Will my gift be deductible?

A charitable bequest or trust distribution is deductible for federal estate tax purposes, and there is no limit on the deduction your estate can claim. In addition, the gift is usually exempt from state inheritance taxes.

What if I’ve already written my will or trust?

You can amend a will or trust to make a gift without rewriting the entire document. Your attorney can prepare a simple statement, called a codicil, that adds a new bequest to us while reaffirming the other terms of your will. Similarly, he or she can prepare an amendment to your revocable trust to add us as a beneficiary.

What’s the difference between an will and a trust?

  • A will is your instruction manual to your survivors about how you want your property distributed. It's a revocable, private document that only takes effect after your death.
  • A revocable trust (sometimes called a living trust) is a legal entity that holds assets during your lifetime, then transfers ownership of them — or benefit from them — upon your death. Unlike a will, a trust must take title to assets before it can pass them to your survivors.
  • There is no difference between wills and revocable trusts in how transfers from them are taxed.  However, in some states (such as Illinois) the probate and distribution process is simpler with a revocable trust. Your advisors can guide you in choosing which vehicle will work better for you.

Bequest -Sample Language

  1. (a)Unrestricted Gift: A gift that can be used where need is greatestI give, devise and bequeath _______________ (insert dollar amount or item of property to be donated) to Hanul Family Alliance, Chicago, Illinois, to be used for its general purposes.
  2. (b)Residuary Bequest: Leaves any remainder after all other bequests have been paid.  I give, devise and bequeath ______________ (insert % amount) of all the residue of my estate to Hanul Family Alliance, Chicago, Illinois, to be used for its general purposes.
  3. (c)Contingency Gift: Takes effect only if a primary intention can’t be met. In the event that ____________ predeceases me, I give, devise, and bequeath his/her bequest or share to Hanul Family Alliance, Chicago, Illinois, to be used for it's general purposes.

2. Charitable Gift Annuity  back to top  toTopArrow

How it works

  • You transfer cash or securities to Hanul Family Alliance
  • Hanul Family Alliance pays you, or up to two annuitants you name, fixed income for life.
  • The principal passes to Hanul Family Alliance when the contract ends.

Benefits:

  • You receive an immediate income tax deduction for a portion of your gift.
  • Your annuity payments are guaranteed for life, backed by a reserve of assets of Hanul Family Alliance.
  • Your annuity payments are treated as part ordinary income, part capital gains income, and part tax-free income.
  • You can have the satisfaction of making a significant gift that benefits you now and Hanul Family Alliance later.

Complete Gift Description

Of all the gifts that pay you back, the charitable gift annuity is the simplest, most affordable, and most popular. You make a gift to the Hanul Family Alliance and in return, we agree to make fixed payments to you for life. The gift agreement is a simple contract between you and Hanul Family Alliance. Your payments become one of our general obligations, fully backed by all our assets. At your death, we apply the balance of the gift annuity to the program you designated when you made your gift.

Gift annuities offer attractive tax benefits:

  • First, you receive a charitable income tax deduction for creating a gift annuity, based on the fair market value of the assets you contributed minus the present value of the life-income interest you retained.
  • Second, if you fund your gift annuity with appreciated securities, no upfront capital gains tax is payable. Only a portion of your capital gain will be recognized, and the tax will be spread out over your annuity payments. The result? You can contribute appreciated but low-yielding assets and put the entire amount of your gift to work earning lifetime payments for you.
  • Third, a portion of your annuity payments will be taxed at a low 15% capital gains rate if you created your gift with appreciated securities. Another portion will be treated as the tax-free return of principal. Only the balance of your payment is taxed as ordinary income to you. This tax treatment, not available on other types of life-income gifts, increasing the effective yield of your gift annuity.

Planning points

  • Your gift annuity can make payments to a maximum of two people.
  • Gift annuity rates are partly determined by the age of the beneficiary.

Charitable Gift Annuity - Is this gift for you?

  1. (a)You want to make a significant gift to us and receive lifetime payments in return.
  2. (b)You want to maximize the payments you receive from your planned gift -- and you want to lower your income tax on those payments.
  3. (c)You want the security of payment amounts that won't fluctuate during your lifetime.
  4. (d)You also appreciate the safety of your payments being a general financial obligation of the institution.

3. Charitable Lead Trusts   back to top  toTopArrow

How it works?

  • You contribute securities or other appreciating assets to a charitable lead trust.
  • The trust makes annual payments to Hanul Family Alliance for a period of time.
  • When the trust terminates, the remaining principal is paid to your heirs.

Benefits

  • The present value of the income payments to Hanul Family Alliance reduces your gift/estate tax.
  • All appreciation that takes place in the trust goes tax-free to your heirs.
  • The amount and term of the payments to Hanul Family Alliance can be set so as to reduce or even eliminate transfer taxes due when the principal reverts to your heirs.
  • You have the satisfaction of making a significant gift to Hanul Family Alliance now that reduces the taxes due on transfers to your heirs later.

Complete gift description

You want to make a gift but you need to consider your children, too.  What if there were a way to make a gift to the Hanul Family Alliance and pass assets to your heirs in a tax advantage way? The solution is a non-grantor lead trust. A non-grantor lead trust pays income to the Hanul Family Alliance for a period of years and then passes the remaining principal back to the beneficiaries you have selected.

What are the tax advantages of this type of lead trust?

  • The non-grantor lead trust reduces the cost of passing property to your heirs in two ways. First, the value of the assets you place in your lead trust, for estate and gift tax purposes, will be reduced by the present value of the income that the trust will pay Hanul Family Alliance. Second, the taxable value of the lead trust's assets is fixed at the time you establish the trust. This means that any subsequent increase in the value of the assets will pass to your heirs outside your estate and thus free of estate or gift tax. 
  • In other words, this combined reduction in the taxable value of the assets means that your family can often receive more from an estate plan containing a non-grantor lead trust than they could from an outright bequest from you.

Are there additional features that I should consider?

  • The lead trust can be funded with shares in a growing family business, thus lowering the tax cost of passing ownership on to the next generation.
  • The income earned by a non-grantor lead trust while it is in operation is not taxable to you.
  • The trust can run for a term of years or for your lifetime.
  • The lead trust is the only income-gift that delivers immediate benefits to Hanul Family Alliance.
  • The longer the lead trust pays Hanul Family Alliance income, and the more income it pays us, the larger your estate and gift tax deduction will be.

How is the amount given to Hanul Family Alliance determined?

When you create your trust, you have several options. First, you can decide whether you want us to receive a fixed amount of income each year (an annuity lead trust), or whether we will receive a fixed percent of the value in the trust (a unitrust lead trust). But wait, you have another choice, too. You also decide how long we are to receive income. You may decide it will be for a period of years or based on a measuring life.

What if I want the income to return to me?

This is certainly possible through the Grantor Lead Trust. However, the non-grantor lead trust offers you more significant tax benefits.

How do I create a Charitable Lead Trust?

Setting up a charitable lead trust is not particularly difficult, but you should be advised by an attorney with expertise in the area of charitable trusts and estate planning.  Once your trust agreement is signed, you can fund your lead trust by transferring assets to your trustee.

Charitable Lead Trusts - Is this gift for you?

A charitable lead trust is for you if…

  • You hold appreciating assets that you want to pass on to the next generation.
  • You want to reduce your gift and estate taxes.
  • Your planning objective is to preserve the value of your estate, not increase your income or reduce your income tax.
  • You are looking for techniques that will give your family more of your estate over a longer period of time.
  • You want your gift to provide a stream of income to us.

Charitable Lead Trusts - Gift example

Assume that you use appreciated property with an average cost basis of 50% to fund a $2 million Charitable Lead Annuity Trust (CLAT) that makes a 6% annuity payment ($120,000) to Hanul Family Alliance for 15 years, after which the trust principal reverts to your grandchildren in a generation skipping transfer. Assume also that your gross estate is currently $10 million, you have made no previous taxable transfers, you are in the 35% federal income tax bracket, and the state income tax for trusts is 2.5%. Assume further that your average total investment return is 7% over the 15 year term. A 2.4% IRS Discount Rate is used to calculate the value of the remainder interest to your heirs.


CLAT Without Trust
Gross Principal $2,000,000 $2,000,000
Net principal placed in plan $2,000,000 $2,000,000
Benefit to family $2,000,000 $2,846,692
Benefit to Hanul Family Alliance $2,100,000 $0
Total Taxes $0 $2,339,561
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*PLEASE NOTE: This example is for illustrative purposes only and is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.




4. Charitable Remainder Annuity Trusts   back to top  toTopArrow

How it works:

  • You transfer cash, securities or other appreciated property into a trust.
  • The trust makes fixed annual payments to you or anyone you name.
  • When the trust ends, the principal passes to Hanul Family Alliance.

Benefits

  • You receive an immediate income tax deduction for a portion of your contribution to the trust.
  • You pay no upfront capital gains tax on any appreciated assets you donate.
  • You or your designated income beneficiaries receive stable, predictable payments for life or a term of years.
  • You can have the satisfaction of making a significant gift that benefits you now and Hanul Family Alliance later.

Complete gift description

The charitable remainder annuity trust combines the flexibility of an individually managed trust with the stability of fixed regular income. Here's how it works:

  • The annuity trust pays its beneficiaries a fixed percentage of the initial value of the assets that funded the trust.
  • Income from your annuity trust can be paid to you and your other beneficiaries for lifetime, for a term of up to 20 years, or for a combination of both.
  • When your annuity trust terminates – at the death of the last beneficiary or at the end of the trust term – the remaining balance will be available for the use you designated when you created the trust.

What are the tax advantages of this gift?

  • First, no upfront capital gains tax is payable if you fund your annuity trust with appreciated property. So, you can contribute appreciated but low-yielding assets and put the entire value of your gift to work generating income for you.
  • Besides avoiding capital gains tax, you also receive a charitable income tax deduction when you create an annuity trust. Your deduction will be based on the full fair market value of the assets you contributed, reduced by the present value of the income interest you retained.

Planning points

  • Because they pay fixed income, annuity trusts cannot accept gifts of illiquid assets or pay out net-income only, as a charitable remainder unitrust[link to unitrust main page] can.  In addition, the charitable income tax deduction for an annuity trust is usually higher than that for a unitrust, because the unitrust is likely to pay out more income to the beneficiaries over time.
  • Annuity trusts are well suited to accept gifts of long-term tax-free bonds, generate a tax deduction, and pass tax-exempt income through to you and your beneficiaries.

How do I create a Charitable Remainder Annuity Trust?

Setting up a charitable remainder annuity trust is not particularly difficult, but you should be advised by an attorney with expertise in the area of charitable trusts and estate planning.  Once your trust agreement is signed, you can fund your annuity trust by transferring assets to your trustee.

Charitable Remainder Annuity Trusts - Is this gift for you?

A charitable remainder trust is for you if…

  • You want to make a major gift to Hanul Family Alliance while retaining or increasing your income from the assets you contribute.
  • You hold appreciated stocks or bonds and want to avoid the capital gains cost of a sale.
  • You prefer the stability of a fixed income.
  • You want a larger charitable deduction for your gift than the unitrust option would provide.
  • You hold tax-free bonds and want to continue to draw tax-free income from your gift plan.

Charitable Remainder Annuity Trusts - Gift example

A 70-year-old donor in the 35% tax bracket establishes an annuity trust with $100,000 of appreciated stock, originally purchased for $10,000. Trust pays donor 6.0% of the initial value as an annuity for life. Trust earns an 8.0% average total return. Assume IRS discount rate of 5.8%.

Trust Principal $100,000
Income tax deduction $47,168
Income tax savings (35%) $16,589
Capital Gains tax savings (15%) $13,500
Annual Income $6,000
Projected after-tax benefit to donor $70,247
Projected benefit to Hanul Family Alliance $160,649
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PLEASE NOTE: This example is for illustrative purposes only and is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.


5. Charitable Remainder Unitrusts   back to top  toTopArrow

How it works

  • You transfer cash, securities or other appreciated property into a trust.
  • The trust pays a percentage of the value of its principal, which is re-valued annually, to you or anyone you name.
  • When the trust ends, the principal passes to Hanul Family Alliance

Benefits

  • You receive an immediate income tax deduction for a portion of your contribution to the trust.
  • You pay no upfront capital gains tax on any appreciated assets you donate.
  • You or your designated income beneficiaries receive income for life or a term of years.
  • You can have the satisfaction of making a significant gift that benefits you now and Hanul Family Alliance later.

Complete gift description

The charitable remainder unitrust is one of the most flexible gift plans available.  The unitrust unlocks your ability to make a significant gift to Hanul Family Alliance while addressing multiple financial and family needs. 

The unitrust is an individually managed trust paying its beneficiaries – you, your spouse, family members, or other individuals – income as a fixed percentage of the value of its principal, which is revalued annually. Here's how a unitrust works:

  • The unitrust pays income to the beneficiaries for their lifetimes, for a term of up to 20 years or for a combination of both.
  • Beneficiaries receive a fixed percentage of the value of the trust's principal, which is revalued annually.
  • Income in excess of that unitrust amount is reinvested to maintain principal and allow for growth.
  • When your unitrust terminates – at the death of the last beneficiary or at the end of the trust term – the remaining balance will be available for the use you designated when you created the trust.

What are the tax advantages of this gift?

  • First, no upfront capital gains tax is payable if you fund your unitrust trust with appreciated property. So, you can contribute appreciated but low-yielding assets and put the entire value of your gift to work generating income for you.
  • Similarly, no capital gains tax is applied to the growth of a unitrust's principal.
  • Besides avoiding capital gains tax, you also receive a charitable income tax deduction when you create an unitrust. Your deduction will be based on the full fair market value of the assets you contributed, reduced by the present value of the assets you retained.

Planning points

  • The unitrust is designed to pay you income as a fixed percentage of gradually increasing principal. An alternative version, called a net-income unitrust, is designed to hold a temporarily illiquid asset or a portfolio of growth securities for a period of time, while it pays the beneficiaries the lesser of the unitrust amount or the trust's actual net income. This option is especially useful to donors who want to make a gift and secure a tax deduction now but who don't need income back immediately.
  • A net-income unitrust can continue in that format for its entire term, or it can make up the accrued difference between actual income payments and the unitrust amount in years when it earns surplus income. An attractive option is the flip unitrust, which changes from an income-only payout to a fixed-percentage distribution when a pre-arranged event occurs – such as the beneficiary turning 65 or the property in the unitrust being sold.
  • A net-income unitrust can change its investments to income instruments with no capital gains liability. Therefore, it is an attractive tool for younger donors to build a supplementary retirement or tuition fund that will grow tax-free, then distribute income when they and their family need it most.

How do I create a Charitable Remainder Unitrust?

Setting up a charitable remainder unitrust is not particularly difficult, but you should be advised by an attorney with expertise in the area of charitable trusts and estate planning.  Once your trust agreement is signed, you can fund your unitrust by transferring assets to your trustee.

Charitable Remainder Unitrusts - Is this gift for you?

A charitable remainder unitrust is for you if…

  • You want to make a major gift to Hanul Family Alliance while retaining or increasing your income from the assets you contribute.
  • You hold appreciated assets -- securities, a business, or investment real estate -- and want to avoid the capital gains cost of a sale.
  • You want the income from your gift to be able to grow over time.
  • You desire maximum flexibility in the operation of your gift: [bullet points as follows:]
    1. You want income paid to your beneficiary for a term of years instead of their lifetime.
    2. You want to donate an appreciating but temporarily illiquid asset to Hanul Family Alliance.

Charitable Remainder Unitrusts - Gift example

A 55 year-old donor in the 35% tax bracket establishes a unitrust with $100,000 of appreciated stock, originally purchased for $20,000. Unitrust pays donor 5.0% of the trust assets re-valued annually for life. Trust earns a 8% average total return. Assume IRS discount rate of 3.4%.

Trust Principal $100,000
Income tax deduction $33,508
Income tax savings (35%) $11,728
Capital Gains tax savings (15%) $12,000
Annual Income $5,000
Projected after-tax benefit to income beneficiary $156,698
Projected benefit to Hanul Family Alliance $228,793
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*PLEASE NOTE: This example is for illustrative purposes only and is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.



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