You can make a bequest for Butler by naming the Foundation in your Will or Trust.  Because specific language is required for this type of gift to be effective, and to ensure the appropriate estate tax treatment, please see your lawyer to make sure your wishes are carried out.  Several examples of bequests under a donor’s Will are:

As a fixed dollar amount:

I give and bequeath the sum of _________ Dollars ($_________) to the Butler Community College Foundation, 901 S. Haverhill Rd., El Dorado, KS 67042, to be used where most needed as determined by the governing board of such charity, without restriction.

As a percentage of the donor’s estate:

I give _________ percent (____%) of the rest and residue of my estate to the Butler Community College Foundation, 901 S. Haverhill Rd., El Dorado, KS 67042, to be used where most needed as determined by the governing board of such charity, without restriction.

By donating property in your Will or Trust, you not only experience the joy of giving, but also the potential benefit of your estate claiming an estate tax deduction upon your death.

Due to the income tax deferred nature of retirement assets, these assets are generally taxable as income to the recipients (called “income in respect of a decedent” or “IRD”).  If you plan to make a gift to charity upon your death, it is best to leave retirement assets with IRD to the charity.  Unlike other recipients such as children or other loved ones, the charity will not have to pay income tax on the retirement plan assets it receives.  Other assets which are not IRD can then be left to loved ones or other non-charitable beneficiaries or other arrangements can be made to replace the wealth that would have otherwise passed to your loved ones upon your death.  A discussion of wealth replacement is summarized in the Wealth Replacement section.

Many annuities allow the owner to name a successor beneficiary after the current beneficiary’s death or designate a beneficiary to receive the annuity payments currently.  Designating the Foundation as the beneficiary of the annuity upon your death ensures you will receive the income for life and Butler will benefit upon your death.  For individuals that will not need the income from the annuity during their lifetimes, naming Butler as the current beneficiary may be an option.  In order to transfer the ownership or name Butler as the beneficiary of an annuity you will need to contact your broker or account manager in connection with the annuity.

• Adding a Beneficiary – Youmay modify your existing life insurance policy to add the Foundation as the primary or joint beneficiary.  Or, you may name the Foundation as a contingent beneficiary.  In that case, the charity receives the death benefits if the primary beneficiary dies before you do.  By naming the Foundation as a beneficiary, you can make a sizeable future gift while retaining ownership over the policy during your lifetime. In this situation, you will not be able to receive a charitable income tax deduction because you retain ownership over the policy. However, your estate should benefit from an estate tax deduction.

• Giving an Existing Policy – Ifyour policy has outlived its purpose, a gift of an existing policy is a great way to contribute to Butler.  By donating your existing policy to the Foundation, you can claim a charitable income tax deduction equal to the cost of replacing your coverage with a comparable policy and the cash value, if any.

• Buying a New Policy – Youcan establish a new life insurance policy and designate the Foundation as owner and beneficiary of the policy. This is a great way to make a significant contribution and receive additional tax advantages. The premium payments you make to sustain the policy are potentially deductible on your federal income tax return in each year premium payments are made.

When donating your assets, you can decide whether you want your income payments now or at a later date. An annuity which makes payments at a later date is a special type of annuity, called a deferred charitable gift annuity.

By donating your cash or other assets now, you can generally claim a charitable income tax deduction on your income tax return for the total gift less the value of the annuity you would receive.  Each annuity payment will be treated partly as a return of principal and partly as ordinary income or capital gains.

A deferred charitable gift annuity gives you even more of a financial advantage.  The payments are not paid out until the time period you designate has elapsed, so the amount of money in the account continues to increase. Once the payments do begin, they will be larger because there is more money in the account.  Also, the deferred charitable gift annuity allows you to claim an income tax deduction now, while you are presumably in a higher tax bracket, and taxes you only upon your receipt of the payments, presumably at retirement when you are in a lower tax bracket.  Many younger donors prefer this method because it increases their retirement income while providing a substantial contribution to charity.

When setting up a charitable remainder trust, you will need to make a number of choices. These choices include deciding what assets to put into the trust, determining the amount of income you would like to receive, and selecting who will administer the trust.  One of the most important choices is the type of charitable remainder trust to use. There are two general types of charitable remainder trusts – the Annuity Trust and the Unitrust.

• Charitable Remainder Annuity Trust – Acharitable remainder annuity trust pays a fixed dollar amount which is defined as a percentage of the original value of the trust or as a stated dollar amount.  If you’re looking for the security of a reliable stream of payments, this type of trust is ideal because it guarantees the payment of a fixed amount of money each year up to the total assets of the trust.

• Charitable Remainder Unitrust – Acharitable remainder unitrust pays a varied amount each year. The payment is determined by a fixed percentage of the fair market value of the assets, revalued annually. If you’re looking to receive larger payments in the long run, you might prefer this type of trust because the value of the trust should grow over time which should result in higher periodic payments.

Both types of charitable remainder trusts provide major tax benefits.  When you put assets in the trust, you should be able to claim a charitable income tax deduction on your income tax return based upon the actuarially determined present value of the assets the charity will receive in the future.  Further, the transfer of appreciated property to the trust gives you even more of a potential tax advantage. Selling the appreciated assets to increase your liquidity might force you to pay capital gain tax on the property.  However, by first transferring the assets to the trust, the trust can then sell the assets without recognizing the tax and reinvest it at a higher rate of return.  Please note that while we generally do not serve as the trustee of such trusts, we are happy to discuss with you or your professional advisors your various alternatives.

The charitable lead trust is one of the most complex methods of planned giving, so if you think you want to use this method, make sure to talk to your lawyer or financial advisor.  When setting up a charitable lead trust, you first need to determine which of your assets you wish to donate.  Next, you can set the amount of income to be given to the charity, and finally, you should determine the period of time for which the charity receives that income.

When you set up a charitable lead trust, you reduce your taxable estate, resulting in decreased federal gift and estate taxes when the remaining trust assets are returned to you or your loved ones.

You can transfer your home or any other piece of real estate to the Foundation and retain a life estate.  You continue to live in the home or have use of the property you transferred until your death.  You are responsible for the taxes and maintenance of the property.  Upon your death the property passes to the Foundation.

Among the benefits of the retained life estate is an income tax deduction for the value of the remainder interest given to the Foundation.  You can terminate your life estate at any time and accelerate the date the Foundation receives the property, this also results in a further income tax deduction in the year you accelerate the transfer.