This article discusses important planned giving terms you should know about.
Planned giving is a great way to keep donating to charities you care about long after you’re gone. But first, you must learn about the complex world of planned giving options. In an effort to provide resources that support the understanding of planned giving explained, we are sharing a planned giving glossary of terms that will give you a background for planned giving terms.
Adjusted Gross Estate
It is the total value of an individual’s estate minus any deductions, such as taxes, debts, and depreciation.
Administrator
It is the total value of an individual’s estate minus any deductions, such as taxes, debts, and depreciation.
Annuity
It is the payment of a fixed sum of money typically for the rest of a person’s life. This fixed income typically comes from the investment of a lump sum of money, whereby the annuity provider invests the lump sum and uses the investment earnings to pay a fixed stream of income to the annuity holder over time. Retirees commonly use it as a source of income and may bequeath a portion of it to charities.
Appreciated Assets
These are assets that have increased in value over time due to various factors such as inflation, market trends, and demand for the asset. When these assets are sold, the individual or business will realize a capital gain, which is the difference between the sale price and the original purchase price. Capital gains may be subject to taxation, depending on the length of time the asset was held and specific tax rules of the jurisdiction.
By donating appreciated assets directly to a nonprofit organization as part of legacy gifting, the donor can receive a tax deduction for the full fair market value of the assets, avoid capital gains taxes, and support the cause they care about. This can be a more beneficial option than selling the assets and giving the proceeds, as it allows the donor to make a larger gift without reducing their net worth.
Assets
Assets are owned property, belongings, and money with financial or sentimental value.
Beneficiary
A beneficiary is a person or organization that receives financial benefits or other gifts under a will, trust, insurance policy, retirement plan, or similar contracts.
Bequest
It is a gift of personal property or money left in a person’s will that is paid to the beneficiary of one’s estate after their death. A bequest can be a specific item, such as a piece of jewelry or a piece of art, or it can be a specific sum of money. Bequests are a common form of legacy giving and can be used to support family members, friends, or charitable organizations, allowing individuals to leave a lasting legacy and make a positive impact on the lives of others after their death.
Blended Gift
It is a donation that includes a combination of cash and other assets like stocks, life insurance, and retirement funds.
Charitable Bequest
Also called legacy gifting, it is a common form of planned giving. It is a written statement in a will that stipulates a donation or gift to be made to a charity, trust, non-profit organization, or foundation, upon a person’s death.
Charitable Lead Trust (CLT)
It is an irrevocable trust created to provide financial aid to a charity for a specific period. In this arrangement, the charity is the first to receive payments, either in the form of income or a fixed amount given regularly for a specified term. After the term ends, the remaining assets in the trust are transferred to the non-charitable beneficiaries, typically the donor’s family or other individuals.
Chattel
A chattel is a piece of movable property, such as furniture, tools, or equipment, that is owned by an individual or a business. Also known as tangible personal property, this type of property is distinguished from real property, which is immovable.
Codicil
A codicil is a legal document that allows a person to make changes to a will by serving as an amendment to an existing will. A person can modify or revoke a will through the use of a codicil. It must also be officially executed and signed like a will. A codicil may be risky to use as it can be separated from the main document or lost entirely.
Conditional Legacy
It is a type of legacy that takes effect only upon the fulfillment of a specific condition of the testator after their death. For example, the beneficiary needs to fulfill a condition such as getting married to qualify for the receipt of the testator’s assets.
Estate
Estate is the net worth of an individual, including all assets such as real estate, investments, cash, and personal property.
Estate Planning
This is the planning done for the management of a person’s assets upon their incapacitation or death. This process is often done with the help of the type of attorney for estate planning.
Executor
Also known as a personal representative, an executor is a person named in a will who is responsible for administering a person’s estate on the latter’s death. An executor will collect the person’s assets, pay pending debts and taxes, and distribute all remaining assets in line with the terms of the will.
Federal Estate Tax
It is a tax levied on the value of a deceased person’s property. Unlike an inheritance tax, it is to be paid from the estate and not by the beneficiaries of a bequest.
Gifts of Appreciated Securities
They are charitable contributions of securities like stocks, bonds, and mutual funds that have significantly appreciated in value over time.
Guardian
It is a legally-appointed individual who manages an incapacitated person’s property and interests. A person can nominate their guardian in their will.
Incapacity
Also known as incompetence, it is the state in which a person is unable to manage their affairs on their own.
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With a charitable bequest to
Rabbi Meir Baal Haness tzedakah
in your will, you set us up as your
messengers to replace difficulty
and sadness with joy for many
years to come.
Let’s Discuss Your Options
Leave a Lasting Imprint on Hearts & Souls
With a charitable bequest to Rabbi Meir Baal Haness tzedakah in your will, you set us up as your messengers to replace difficulty and sadness with joy for many years to come.
Let’s Discuss Your Options
Inheritance
This is the title of one’s property or assets that are passed to heirs or beneficiaries after their death.
Inheritance Tax (IHT)
It is the tax applicable to the value of an inheritance that must be paid before distributing assets to the inheritors or beneficiaries.
Intangible Personal Property
This type of property has value but does not physically exist and cannot be touched. It includes bank accounts, securities like stocks and bonds, and intellectual property like copyrights and patents. This is an important part of an individual’s estate and can be passed down as part of an inheritance.
Intestacy
It is a situation or condition when a person dies without leaving a valid will. In this case, state laws will determine the division of a person’s estate among their heirs. If there are no surviving heirs, the state will absorb the estate.
Irrevocable Gift
It is a gift of assets that cannot be changed or annulled.
Irrevocable Trust
It is a type of trust that needs the approval of the trustees, beneficiaries, and the court if a trustor wants to change the trust’s regulations.
Joint Ownership
It is a state in which two or more people jointly own property, often with the right of survivorship.
Life Insurance Policy
It is a contract in which an insurer agrees to pay the beneficiaries of an insurance policyholder a regular sum of money upon the insured’s death. The policy can be bequeathed to charities as a form of planned giving.
Living Will
Also called an advance healthcare directive, this written legal document lists the healthcare services and treatments that the testator would want if they cannot decide for themselves or communicate due to incapacity or illness. It also spells out other important healthcare decisions, including organ donation.
Pecuniary Legacy
It is a specific type of gift or bequest in a will, where the beneficiary is given a specific sum of money or other financial asset, rather than a specific item of property, that is paid out of the decedent’s estate and can be used for any purpose designated by the beneficiary. This is a common form of legacy giving and can be used to support family members, friends, or charitable organizations to provide for specific expenses, such as education costs or medical bills.
Planned Giving
This is a type of charitable giving. It involves making a long-term commitment to support a nonprofit organization or cause through gifts made as part of an individual’s estate or financial plan. It typically involves a more intentional and strategic approach to giving, taking into account factors such as tax benefits, personal values and goals, and the specific needs and goals of the organization being supported.
Planned giving can take many forms, including bequests, charitable trusts, charitable gift annuities, and life insurance gifts, serving as a way to make a significant impact while also achieving one’s financial and personal goals.
Power of Attorney
It is a legal document that gives someone else the authority to act on one’s behalf in financial, legal, or other matters in the event of the principal’s absence, disability, or incompetency. The person who creates the POA (the grantor) appoints someone else (the attorney-in-fact or agent) to act as their representative. The scope of the attorney-in-fact’s authority is defined in the POA document and can be limited to specific transactions or to a specific period of time.
Probate
It is the testing or review of a will before a probate court to ensure its authenticity, validity, and the proper distribution of the testator’s estate. It is often done immediately after the testator’s death.
Probate Attorney
A probate attorney is a lawyer licensed by the state. They work with an estate’s executors and beneficiaries to manage and settle the decedent’s affairs.
Real Property
This includes land and other immovable property, such as structures, along with any attached rights. In planned giving, people often bequeath real property to charities or give it to create a charitable remainder trust (CRT).
Residue
Retirement Accounts
They include individual retirement accounts (IRAs), 401(k)s, and other qualified plans that allow people to maintain tax-free savings for retirement. People can use them to make planned gifts by naming charities as beneficiaries of their retirement accounts. They can specify the amount or percentage that they want to bequeath to a charity.
Secondary Beneficiary
A secondary or contingent beneficiary is designated by a will or contract to be the recipient of a testator’s life income payments and other assets if the primary beneficiary dies first.
Tangible Personal Property
Also called chattels, tangible personal property are movable physical objects. They include furniture, china, artwork, jewelry, books, cars, livestock, appliances, and other personal belongings.
These tangible assets are different from real property, which is immovable. Tangible personal property is the opposite of intangible personal property.
Tax Deduction
This is an expense or amount that a person can deduct from their taxable income to reduce the amount of taxes they need to pay. By reducing taxable income, tax deductions can lower the overall tax liability for an individual or business.Examples of common tax deductions include mortgage interest, state and local taxes, charitable contributions, and business expenses for self-employed individuals.
Testator/Testatrix
It is a person who creates a will to manage their assets.
Trust
It is a legal entity that holds assets or property and administers them rightfully to the beneficiaries of a trustor after their death. It is created by a trustor who transfers the right to manage and hold title to their assets or property to a trustee for a beneficiary’s benefit. A trust helps settle the estate as per the agreement terms.
Trustee
A trustee is an individual or organization named in a will to manage the trust’s interests per the terms of the will. The trustee makes decisions that benefit the trust’s beneficiaries after distributing the remaining estate.
They have a similar role as an estate’s executor. They also often initially work as executors until the beneficiaries appoint another executor.
Will
It is a legal document in which a testator states their wishes for their estate’s distribution upon death.
Will Attorney
A will attorney that helps a testator create and review a will to ensure it adheres to federal and state laws.
A Legacy of Authentic Giving
We hope you found this legacy-giving glossary of terms useful in providing a better understanding of planned giving terms. With this glossary of charitable bequest terms in your hands, you can now effectively work towards arranging your specific legacy giving plans.
Such charitable bequests can be the greatest source of blessings for you and your family. It also helps you support your favorite organizations beyond your lifetime and harness the powerful benefits of planned giving.
Your generous bequest to Rabbi Meir Baal Haness will support families in need in Eretz Yisroel (the Holy Land of Israel). As a charitable organization that supports individuals and families in need, whether they are orphaned, widowed, special needs, ill, financially strapped, or the like, we strive to make a difference and offer hope to those in a bleak and challenging situation.
Create a charitable bequest now and reap the merits of planned giving.
With the many benefits of charitable bequests, find out more about what is planned giving and how to leave a bequest to charity.
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