Taking the CFRE today.

Today I am taking the Certified Fundraising Executive exam. I have been studying for several months and I hope I am ready. It is a four hour test on a number of topics. I haven't taken a test in a few years. All the butterflies I hated from those days have returned in force. There is good reason to worry, a lot of people don't pass the test and I have been known to be in the "lot of people" group.


The one area I still am a little worried about is the planned/estate giving side of the test. Here is a summary of the tools and reasons why someone might choose a particular tool in their estate plan. This is what I have been studying. Most I have taken straight from the Deseret Trust Company website, which by the way is the trust company we use to help members of the Church make planned gifts to the Church.

Charitable Remainder Unitrust

The most popular and flexible type of life income plan is a charitable remainder unitrust (CRUT). Cash, securities, real property, or other assets are transferred into the trust. The trustee manages the trust assets and pays you or others you choose a variable income for life or for a term of years. When the trust terminates, the remaining assets in the trust are transferred to the Church or one of its institutions.

The typical donor:

• Needs income for life or a specified term of years.
• Desires more income as the trust value increases.
• Tolerates some investment risk to provide for growth.
• Wants to make additional gifts to the trust.
• Is between the ages of 55 and 80.

Gift features and benefits:

• Income for life (variable payments)
• Possibility of multiple beneficiaries
• Assets transferred to the trust can be reinvested
• Ability to choose the trustee (may be the donor)
• Flexible investment possibilities for the beneficiary

How do I Make a Gift Using a Charitable Remainder Unitrust?

A trust document tailored to your needs is drafted. Your assets are transferred to the trustee you choose. The assets are usually sold by the trustee and reinvested to match your income objectives. You receive variable income for your life or a specified period of years. At your death or the end of the period, the remaining assets are transferred to the charity of your choice.

Before you begin, you need to make sure your financial and legal advisors are part of your gift strategy team. A charitable remainder unitrust can have an impact on other parts of your financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in the creation of trust documents.

Other Facts You Should Know about a Charitable Remainder Unitrust

The "income tax deduction" you receive from a charitable remainder unitrust is based on an Internal Revenue Service (IRS) formula that considers the ages of the donors and income beneficiaries, the payout of the trust, and an IRS index rate known as the Applicable Federal Rate (AFR). The older you are, the larger your income tax deduction. Generally, if the trust is for a term of years rather than for life, the income tax deduction will be larger. If the present value of the remainder interest equals at least 10% of the value of assets transferred into the trust, the trust will qualify as a charitable remainder unitrust.

There are four types of Charitable Remainder Unitrusts:

1. A standard unitrust pays the stated amount from the trust regardless of how much income is earned. The payout is the stated percentage of the trust assets as valued annually.
2. A net income unitrust pays the stated amount from the trust to the extent of income earned in the trust without invading principal. The payout is the stated percentage of the trust assets as valued annually.
3. A net income with makeup unitrust pays the stated amount from the trust to the extent of income earned in the trust without invading principal. It has the ability to makeup income in subsequent years if the income earned is less than the stated payout rate.
4. A flip unitrust is a net income unitrust that "flips" to a standard unitrust when a specified date or event occurs such as a birth, a death, or the sale of a hard-to-market property.

The trust provisions you have control of when drafting your charitable remainder unitrust include:

• Choosing a trustee.
• Designating the income beneficiaries.
• Naming the charitable remainder beneficiaries.
• Deciding on a payout rate for the trust.
• Determining the frequency of the payments.
• Selecting the term of the trust.

With a charitable remainder unitrust, certain activities known as "self-dealing" are prohibited. Self-dealing rules prevent a donor who has transferred property to a trust, or a donor's family, from dealing with the trust. Actions considered to be "dealing" include buying from, selling to, and renting from the trust, and continuing to do business with the trust. The donor, the trustee, members of their families, and entities such as corporations in which they have substantial interests are "disqualified persons" and are prohibited from dealing with a trust that has been a recipient of the donor's property.

Federal tax law outlines a tier system that determines the taxation of trust income to income beneficiaries of a charitable remainder unitrust. Whether or not all income produced by the trust is distributed to the income beneficiary, the trust pays no income taxes on its earnings as long as it has no unrelated business taxable income (UBTI). An example of UBTI would be debt-financed income. The income to the income beneficiary from the trust is taxed based on the historical pattern of how income in the trust was earned. Income distributions are taxed in the following order:

1. Ordinary income
2. Capital gain income
3. Tax-free income
4. Return of principal (corpus)

For example, suppose you transferred a piece of real estate to the trust, and then sold the real estate and reinvested in blue-chip stock that provides both dividend income and capital growth. As income is paid from the trust to you, you would report all income as ordinary income (tier 1) to the extent of all dividend income received into the trust. Only after recognizing all ordinary income would you then report capital gain income (tier 2) from the sale of the real estate. As a general rule, you should assume for planning purposes that trust income will be taxed as ordinary income.

Charitable Remainder Annuity Trust

A charitable remainder annuity trust (CRAT) is a popular type of life-income plan. Cash, securities, real property, or other assets are transferred into a trust. The trustee manages the trust assets and pays you or others you choose a fixed income for life or for a term of years. When the trust terminates, the remaining assets in the trust are transferred to the Church or one of its institutions.

The typical donor:

• Needs income for life or a specified term of years.
• Desires a fixed income based on the original value of assets transferred.
• Does not plan to make additional gifts to the trust in the future.
• Is between the ages of 55 and 80.

Gift features and benefits:

• Income for life (fixed payments)
• Possibility of multiple beneficiaries
• Assets transferred to the trust can be reinvested
• Ability to choose the trustee (may be the donor)
• Investment of assets is designed to balance income needs with preservation of principal

How Do I Make a Gift Using a Charitable Remainder Annuity Trust?



A trust document tailored to your needs is drafted. Your assets are transferred to the trustee you choose. The assets are usually sold by the trustee and reinvested to match your income objectives. You receive fixed income for your life or a specified period of years. At your death or the end of the period, the remaining assets are transferred to the charity of your choice.

Before you begin, you need to make sure your financial and legal advisors are part of your gift strategy team. A charitable remainder annuity trust can have an impact on other parts of your financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in the creation of trust documents.

Other Facts You Should Know about a Charitable Remainder Annuity Trust
The income tax deduction you receive from a charitable remainder annuity trust is based on an Internal Revenue Service (IRS) formula that considers the ages of the donors and income beneficiaries, the payout of the trust, and an IRS index rate known as the Applicable Federal Rate (AFR). The older you are, the larger your income tax deduction. Generally, if the trust is for a term of years rather than for life, the income tax deduction will be larger. If the present value of the remainder interest equals at least 10 percent of the value of assets transferred into the trust, the trust will qualify as a charitable remainder annuity trust. Also, a federally imposed 5 percent probability test determines the viability of the trust assets supporting the annuity payments. To qualify, the trust provision must meet this test.

The trust provisions you have control of when drafting your charitable remainder annuity trust include:

• Choosing a trustee.
• Designating the income beneficiaries.
• Naming the charitable remainder beneficiaries.
• Deciding on a payout rate for the trust.
• Determining the frequency of the payments.
• Selecting the term of the trust.

With a charitable remainder annuity trust, certain activities associated known as "self-dealing" are prohibited. Self-dealing rules prevent a donor who has transferred property to a trust, or a donor's family, from dealing with the trust. Actions considered to be "dealing" include buying from, selling to, and renting from the trust, and continuing to do business with the trust. The donor, the trustee, members of their families, and entities such as corporations in which they have substantial interests are "disqualified persons" and are prohibited from dealing with a trust that has been a recipient of the donor's property.

Charitable remainder annuity trusts use a tier system in determining the taxation of trust income to income beneficiaries. Whether or not all income produced by the trust is distributed to the income beneficiary, the trust pays no income taxes on its earnings as long as it has no unrelated business taxable income (UBTI). An example of UBTI would be debt-financed income. The income to the income beneficiary from the trust is taxed based on the historical pattern of how income in the trust was earned. Income distributions are taxed in the following order:

1. Ordinary income
2. Capital gain income
3. Tax-free income
4. Return of principal (corpus)

For example, suppose you transferred a piece of real estate to the trust then sold the real estate and reinvested in blue-chip stock that provided both dividend income and capital growth. As income is paid from the trust to you, you would report all income as ordinary income (tier 1) to the extent of all dividend income received into the trust. Only after recognizing all ordinary income would you then report capital gain income (tier 2) from the sale of the real estate. As a general rule, you should assume for planning purposes that trust income will be taxed as ordinary income.

Charitable Gift Annuity

A charitable gift annuity (CGA) is often a gift of choice when a guaranteed income is desired. A gift of cash or securities is transferred to Deseret Trust Company in exchange for a contractual life income paid monthly or quarterly. The income is guaranteed by the issuing charity. A portion of the gift is invested and used to provide income for life, and the remaining portion qualifies as a present-interest gift to the Church or one of its institutions. Part of the annuity income may be received tax free. Any capital gains taxes due on the asset that was exchanged for the annuity are paid over the annuitant's life expectancy.

The typical donor:

• Needs guaranteed income for life.
• Wants a fixed income based on the original value of assets transferred.
• Desires to make a "present gift" for estate planning purposes.
• Does not plan to make additional gifts to the annuity.
• Is between the ages of 55 and 80.

Gift features and benefits:

• Income for life (fixed payments)
• Possibility of one or two income beneficiaries
• Guaranteed contractual agreement
• Issued and administrated by Deseret Trust Company

How Do I Make a Gift Using a Charitable Gift Annuity?



Charitable gift annuities cannot be issued in every state because of differing regulatory requirements. LDS Philanthropies can advise you regarding availability in your state. The professional staff of LDS Philanthropies drafts a gift annuity document that names the annuitant and the gift recipient, either the Church or one of its institutions. Once the document is signed by both you and Deseret Trust Company, you transfer cash or marketable securities to Deseret Trust Company. If the asset to be exchanged is marketable securities, contact Deseret Trust Company for information, including its account information at Depository Trust, which your broker will need to complete the transfer of your securities.

Before you begin, be sure your financial and legal advisors are part of your gift strategy team. A charitable gift annuity can have an impact on other parts of your financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in the completion of your gift annuity documents.

Other Facts You Should Know About a Charitable Gift Annuity
Sample rates offered for a $50,000 gift using a charitable gift annuity with Deseret Trust Company on 1 July 2001 were:

1. age 65, 6.7%, income of $3,350, tax deduction of $17,068
2. age 70, 7.2%, income of $3,600, tax deduction of $18,982
3. age 75, 7.9%, income of $3,950, tax deduction of $20,972
4. age 80, 8.9%, income of $4,450, tax deduction of $23,126

A charitable gift annuity is a contract between you and Deseret Trust Company. You make a gift to a charity that is legally obligated to pay you a fixed amount of income for your lifetime. The transaction is, in reality, a bargain sale—part sale and part gift—because the value of your gift to the charity exceeds the value of the annuity promised by the charity. The annuity is backed by the general assets of the issuing charity (Deseret Trust Company). The rate you receive for your annuity is structured to provide the Church or one of its institutions with a gift amounting to approximately 50 percent of the amount transferred in exchange for the annuity.

When you establish a gift annuity with the Deseret Trust Company and are concurrently working with a licensed financial professional, Deseret Trust Company may choose to buy an annuity contract on your life from a commercial insurance company. In that situation, your annuity amount and terms of the agreement remain unaltered.

The Deseret Trust Company adheres to the charitable gift annuity rates established by the American Council on Gift Annuities, a national organization that suggests rates for nonprofit organizations to offer to annuitants. The recommended rates are based on age and are the same for both genders. There can be exceptions to those rates based on extenuating circumstances.

Deferred Charitable Gift Annuity

A deferred charitable gift annuity (DCGA) is often the gift of choice when a future guaranteed income is desired. A gift of cash or securities is transferred to Deseret Trust Company in exchange for a contractual life income paid at least annually. The income is guaranteed by the issuing charity. A portion of the gift is invested and used to provide income for life, and the remaining portion qualifies as a present-interest gift to the Church or one of its institutions. Part of the annuity income may be received tax free. Any capital gains taxes due on the asset that was exchanged for the annuity are paid over the annuitant's life expectancy.

The typical donor:

• Needs future guaranteed income for life.
• Wishes to have a fixed income based on the original value of assets transferred.
• Desires to make a "present gift."
• Does not plan to make additional gifts to the annuity.
• Is between the ages of 40 and 60.

Gift features and benefits:

• Income for life (fixed payments)
• Donor can select the starting date of the income based on life situation
• Possibility of one or two income beneficiaries
• Guaranteed contractual agreement
• Issued and administrated by Deseret Trust Company

How Do I Make a Gift Using a Deferred Charitable Gift Annuity?



Deferred charitable gift annuities cannot be issued in every state because of differing regulatory requirements. LDS Philanthropies can advise you regarding availability in your state. The professional staff of LDS Philanthropies drafts a deferred gift annuity document that names the annuitant and the gift recipient, either the Church or one of its institutions. Once the document is signed by both you and Deseret Trust Company, you transfer cash or marketable securities to Deseret Trust Company. If the asset to be exchanged is marketable securities, contact Deseret Trust Company for information, including its account information at Depository Trust, which your broker will need to complete the transfer of your securities.

Before you begin, be sure your financial and legal advisors are part of your gift strategy team. A deferred charitable gift annuity can have an impact on other parts of your financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in the completion of your deferred gift annuity documents.

Other Facts You Should Know About a Deferred Charitable Gift Annuity
A deferred charitable gift annuity is a contract between you and Deseret Trust Company. You make a gift to a charity that is legally obligated to pay you, beginning at a future date, a fixed amount of income for your lifetime. The transaction is, in reality, a bargain sale—part sale and part gift—because the value of your gift to the charity exceeds the value of the annuity promised by the charity. The annuity is backed by the general assets of the issuing charity (Deseret Trust Company). The rate you receive for your annuity is structured to provide the Church or one of its institutions with a gift amounting to approximately 50 percent of the amount transferred in exchange for the annuity.

When you establish a deferred charitable gift annuity with Deseret Trust Company and are concurrently working with a licensed financial professional, Deseret Trust Company may choose to buy an annuity contract on your life from a commercial insurance company. In that situation, your annuity amount and terms of the agreement remain unaltered.

The Deseret Trust Company adheres to the charitable gift annuity rates established by the American Council on Gift Annuities, a national organization that suggests rates for nonprofit organizations to offer to annuitants. The recommended rates are based on age and are the same for both genders. There can be exceptions to those rates based on extenuating circumstances.

Pooled Income Fund

The pooled income fund (PIF) is often referred to as the "mutual fund of life income gifts." A gift of cash or securities is transferred into a pooled income fund at Deseret Trust Company, which, as trustee, manages the assets and pays an income for life to you or the income beneficiaries you designate. At the death of the income beneficiary, the remaining assets left in the pooled income fund account are transferred to the Church or one of its institutions.

The typical donor:

• Needs variable income for life.
• Seeks income that is market sensitive.
• May participate in different pooled income accounts for varied needs.
• Is between the ages of 55 and 80.

Gift features and benefits:

• Income for life, market sensitive
• Mutual fund approach to a charitable trust
• Reinvestment of assets transferred to the trust
• Deseret Trust Company manages the fund

How Do I Make a Gift Using a Pooled Income Fund?



Deseret Trust Company has created and manages several pooled income funds. After cash or marketable securities are transferred to Deseret Trust Company, these assets are pooled, reinvested, and managed with other donors' assets to leverage investment performance. A percentage share of the income earned in the fund is paid to you or the income beneficiaries you choose. When the income beneficiaries die, the remaining assets in your portion of that fund are transferred to the Church or one of its institutions.

Before you begin, you need to make sure your financial and legal advisors are part of your gift strategy team. A gift using one of Deseret Trust Company's pooled income funds can have an impact on other parts of your financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in completing your gift.

Other Facts You Should Know about a Pooled Income Fund
The income tax deduction you receive when giving through a pooled income fund is based on an Internal Revenue Service formula that considers your age, the ages of other income beneficiaries, the projected assumed payout of the fund, and a federal index rate. The older you are at the time you make a pooled income fund gift, the larger your income tax deduction based on the amount of gift transferred.

The trust provisions you have control of when giving through a pooled income fund include:

• Naming the income beneficiaries.
• Choosing the charitable remainder beneficiaries.
• Selecting the frequency of income payments.

Deseret Pooled Income Fund Disclosure Statement* (PDF)

Revocable Living Trust

If you have named The Church of Jesus Christ of Latter-day Saints or one of its institutions as a beneficiary in your will, trust, or other legal instrument please register it by clicking here.

One of the most common and flexible ways of providing for your heirs and giving to a charity of your choice is to use a revocable living trust. It is usually created in partnership with a "pour over" will that transfers property into the trust that was not transferred previously. A revocable living trust is a valuable part of your estate plan that avoids probate and yet allows you to revoke or amend its provisions at any time during your life.

A trust is simply a legal entity that can hold and invest property on behalf of beneficiaries. Trusts are administered by a trustee. You may act as your own "self-trustee," or you can choose an individual or corporate trustee to act in your behalf.

The typical donor:

• Needs variable income for life.
• Seeks income that is market sensitive.
• May participate in different pooled income accounts for varied needs.
• Is between the ages of 55 and 80.

Gift features and benefits:

• Income for life, market sensitive
• Mutual fund approach to a charitable trust
• Reinvestment of assets transferred to the trust
• Deseret Trust Company manages the fund

How Do I Make a Gift Using a Revocable Living Trust?
The process of making a gift through a revocable living trust helps you focus attention on the future for both you and your loved ones. A revocable living trust is often used in combination with a will, charitable trusts, life insurance trusts, family partnerships, or other planning vehicles.

Revocable living trusts can be very complex and should only be completed with help from your legal and financial advisors. The professional staff at LDS Philanthropies will work in partnership with your advisors to achieve your goals. They can provide such information as the correct legal names of Church entities or the best charitable tools to help you reach your objectives. As we work together, you can be assured that bequests made through your revocable living trust will be part of a carefully structured plan to provide security for you and your heirs and to help benefit the Church and its institutions as you desire to do so.

Other Facts You Should Know about a Revocable Living Trust
Ownership of your assets and how title to those assets is held are two of the most important considerations in planning your revocable living trust. Ways in which title to assets may be held include the following:

Sole ownership is a form of ownership in which the entire interest in the property is held by one individual who has the power to transfer the property to another by will or trust.

Tenancy in common is a form of title where two or more owners share an undivided interest in the property. A tenancy in common is the customary form of ownership for friends or family members, but not for spouses who own property together. Upon the death of one cotenant, that cotenant's interest in the property can be transferred by will to his or her heirs. Ownership does not automatically pass to the surviving tenants in common, as is the case with joint tenancy.

Joint tenancy with rights of survivorship is a form of title in which property is automatically transferred to the surviving joint tenants with right of survivorship at the death of another joint tenant. The property cannot be transferred by will or trust.

Tenancy by the entirety is a form of title that exists in a limited number of states as a special form of joint tenancy held only by spouses. Upon the death of one spouse, the property passes automatically to the surviving spouse.

Community property is a form of ownership found in the states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In many community property states, all property acquired during a marriage, except property acquired by gift, inheritance, or with separate funds, is presumed to be community property, with each spouse owning one half of the property. Property acquired prior to a marriage is separately owned by the spouse who acquired the property.

Testamentary Trust

If you have named The Church of Jesus Christ of Latter-day Saints or one of its institutions as a beneficiary in your will, trust, or other legal instrument please register it by clicking here.

Testamentary trusts are trusts that take effect at your death. Although you may desire to make a substantial gift to the Church or one of its institutions, your circumstances may not allow you to complete such a gift until you have provided for your spouse or others. Charitable Remainder Unitrusts,Charitable Remainder Annuity Trusts, Charitable Lead Trusts, Charitable Gift Annuities, and nonqualified trusts can be established by Will or Revocable Living Trust at your death. As an example, you and your spouse can arrange to create a charitable remainder trust when the last of you dies to provide income to your children for 20 years, after which the amount left in the trust will go to benefit the Church or one of its institutions. A substantial part of the value of the asset transferred can avoid estate and gift taxes.

The typical donor:

• Needs assets available during life.
• Wants to benefit heirs first with an income stream followed by a significant gift.
• Creates a gift as part of an overall estate plan.

Gift features and benefits:

• Full or partial gift or estate tax deduction
• Flexible estate planning
• All assets available during life
• Revocable during life

How Do I Make a Gift of a Testamentary Trust?
Gifts made through a testamentary trust should be structured as part of your overall financial and estate plan. They can be an integral part of your gift planning and also meet the special needs of your heirs. Because these gift types may be complex, you should always involve your legal and financial advisors to implement a workable plan. The professional staff at LDS Philanthropies is available to counsel with you and your advisors in meeting your goals.

Other Facts You Should Know about Testamentary Trusts
Testamentary trusts often mesh with other aspects of an individual's overall estate and gift plan. Here are a few related concepts to consider:

Generation-skipping trust is a trust that transfers payment down to grandchildren. For example, a grandmother creates a trust giving income to her children and the trust assets ultimately to her grandchildren. Because she "skipped" her children and passed the property to the next generation, there are special limitations and transfer taxes that should be considered.

Incapacity is the lack of legal ability or power to do something. Examples might be a minor child that does not have the legal right to vote or make contracts, or an intellectually handicapped child that has special needs after you are gone, such as income for life.

Spendthrift trust is a special-needs trust in which a trustee looks after property or other assets on behalf of a person who spends money unwisely. This arrangement protects a person's property against himself or herself, or against creditors.

Sprinkling trust is a trust that gives the trustee discretion to distribute income to many people at different times. This mechanism is often used to make distributions "as needed" to children or grandchildren for purposes such as schooling or missions.

Will substitutes include devices such as life insurance, joint-ownership of property, trusts, and other devices to partially eliminate the need for a will.

Life Insurance In A Gift Plan

If you have named The Church of Jesus Christ of Latter-day Saints or one of its institutions as a beneficiary in your will, trust, or other legal instrument please register it by clicking here.

Life insurance is a valuable gift option that is often overlooked. Life insurance is frequently purchased as part of an overall financial or estate plan. As circumstances in life change, the need for insurance may diminish. A gift of a paid-up policy can provide tremendous benefits to the Church or one of its institutions.

The typical donor:

• Has outgrown the need for the insurance protection.
• Has paid into the policy for several years.
• Wants to insure completion of a significant gift.
• Uses the gift of insurance as part of an overall financial plan.

Gift features and benefits:

• Immediate income tax deduction available to 50 percent of adjusted gross income
• Flexibility in completing various giving plans

How Do I Make a Gift of a Life Insurance Policy with Cash Value?
To transfer ownership of an existing policy to the Church or one of its institutions, obtain a "change of ownership and beneficiary" form from your agent or insurance company. You should complete those portions of the form pertaining to "change of ownership" and "beneficiary designation." The correct name of the Church or one of its institutions must be used (contact LDS Philanthropies for this information). The appropriate form and a copy of the policy should then be transferred to LDS Philanthropies in behalf of the Church or one of its institutions. The receiving institution must sign the "change of ownership" form as the new owner. If the policy is not "paid up," future premiums are treated as cash gifts to the Church or one of its institutions.

If your are considering a new policy as a gift to the Church or one of its institutions, contact an LDS Philanthropies professional. Each state has different requirements regarding "insurable interests" associated with the right of the charitable recipient to purchase a policy on your life. Some states require that you initiate the policy with a minimum premium payment before you can transfer the policy to the Church or one of its institutions.

How Do I Make a Gift of Life Insurance with Cash Value using Gift-Planning Tools?
A common use of life insurance is to create an “Irrevocable Life Insurance Trust” (ILIT) to use in conjunction with the creation of a Charitable Remainder Unitrust. Using this concept, an asset such as raw land is transferred to a charitable remainder trust, sold in the tax-free environment of the trust and reinvested. Income is paid to you, and you "gift" some portion of the income to an irrevocable insurance trust which is owned by your heirs. At your death, the unitrust corpus will go to the Church or one of its institutions and the life insurance in the insurance trust is available for your heirs free of estate and income tax. Charitable planning using these concepts should be undertaken only with the advice and counsel of your financial and legal professionals. The professional staff at LDS Philanthropies will be happy to work with your advisors to help you achieve your charitable goals.

Other Facts You Should Know about a Gift of Life Insurance with Cash Value
Two forms of life insurance are typically donated: paid-up "whole life" and "universal life." Awhole life policy usually has cash value that may be used for the immediate needs of the Church or one of its institutions. Universal life policies can usually be structured so that premiums will not need to be paid after a period of years.

The charitable income tax deduction for a partially paid-up policy is based on the "Interpolated Terminal Reserve" (ITR) and not the policy's cash value. Use of the ITR for gift valuation purposes is an Internal Revenue Service regulatory requirement. The ITR value is an amount that reflects the daily current value of the policy and is slightly more than the cash surrender value (the amount the insured would receive) if the policy were cashed-in to the insurance company.

Retained Life Estate Deed Using A Personal Residence Or Farm

If you have named The Church of Jesus Christ of Latter-day Saints or one of its institutions as a beneficiary in your will, trust, or other legal instrument please register it by clicking here.

A retained life estate deed allows you to donate your personal residence or farm to the Church or one of its institutions while retaining the right to live on and use the property. You may also consider donating a vacation home by this type of gift. When you make the gift, you retain the right to use the property for the rest of your life, a term of years, or a combination of the two. In exchange for your remainder interest gift, you receive an immediate income tax deduction.

The typical donor:

• Wants to make a gift while retaining the right to use his or her property.
• Has income he or she would like to offset with a charitable tax deduction.
• Does not desire to pass personal residence or farm to heirs.

Gift features and benefits:

• Immediate income tax deduction
• Full use of asset during life
• Meaningful gift to charity
• Reduction of gift and estate taxes

How Do I Make a Gift Using a Retained Life Estate Deed with a Personal Residence or Farm?

A gift of a Retained Life Estate Deed to the Church or one of its institutions must be reviewed and evaluated by the Church Real Estate Division. LDS Philanthropies can assist you with this process. AReal Estate Packet* of specific information about the personal residence or farm must be completed and sent to LDS Philanthropies. Once a Real Estate Packet is received by LDS Philanthropies, the evaluation process may take 60 to 90 days to complete. This process includes such items as a physical inspection, environmental assessment, title report, appraisal, and so forth. When the evaluation is complete, you will receive notification of the results.

For tax purposes, you must obtain your own appraisal to determine the fair market value you claim on your income tax return. Your tax return must include IRS form 8283 signed by your appraiser.

Other Facts You Should Know about a Retained Life Estate Deed Using a Personal Residence or Farm
While you retain the right to live on and use the property, you continue to be responsible for all routine expenses such as maintenance fees, insurance, property taxes, and repairs. If you later decide to vacate the property, you may rent all or part of the property to someone else, or sell the property in cooperation with the beneficiary institution.

Charitable Lead Trust

Charitable lead trusts (CLT) are often viewed as the opposite of a charitable remainder trust. A donor transfers property to the lead trust, which pays a percentage of the value of the trust assets, usually for a term of years, to the Church or one of its institutions. At the end of the trust term, the remaining assets in the trust and any growth it has realized are passed to your heirs. Although there is no income tax deduction when you create a charitable lead trust, your gift or estate tax is greatly discounted and any growth is passed to your heirs gift and estate tax free. It is one of the only transfer devices currently used that can discount the value of the original assets and result in little or no taxes. At the same time, you fulfill your charitable desires.

The typical donor:

• Has a moderate to large taxable estate.
• Has given to charities in the past.
• Holds assets with growth potential.
• Desires to pass certain assets to heirs.

Gift features and benefits:

• Gift and estate tax deduction on the value of assets transferred
• Growth transferred tax free
• Perpetuates a tradition of charitable giving
• Management of assets transferred

How Do I Make a Gift Using a Charitable Lead Trust?



A nongrantor charitable lead annuity trust document, the form of charitable lead trust most commonly used, is tailored to your needs by your legal professionals, with the assistance of the professional staff at LDS Philanthropies. You transfer appropriate assets to the trustee of the charitable lead annuity trust. The assets may be sold or retained, depending on the objectives desired. The trust pays a percentage of the original trust value to the Church or one of its institutions. Unlike a charitable remainder trust, a charitable lead annuity trust creates no income tax deduction to you, but the income earned in the trust is not attributed to you. The trust itself is taxed according to trust rates. The trust receives an income tax deduction for the income paid to charity.

The real value of using a charitable lead annuity trust is that the original asset values receive a gift and estate tax deduction based on the value of the income stream given to charity. Excess earnings and growth add to the value of the trust corpus. Each year as the charitable lead annuity trust corpus grows, the percentage paid to the charity represents a smaller percentage of the total trust value. At the end of the trust term, the trust terminates and all the assets in the trust, including growth, are transferred to your heirs without further gift or estate tax.

Before you begin, you should be sure to involve your financial and legal advisors as part of your gift-strategy team. A nongrantor charitable lead annuity trust is only effective as part of an overall financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in the implementation of a nongrantor charitable lead annuity trust within your overall estate plan.

Other Facts You Should Know About a Charitable Lead Trust
There are two general types of charitable lead trusts—a grantor charitable lead trust and a nongrantor charitable lead trust. Each can be in the form of a unitrust or an annuity trust. A grantor charitable lead trust provides an income tax deduction on its creation to the grantor (donor); however the grantor is taxed on the income paid to the charity. There are limited uses for grantor charitable lead trusts in both the unitrust and annuity variations. Therefore, a majority of estates use a nongrantor charitable lead annuity trust.

A nongrantor charitable lead annuity trust is primarily used in conjunction with an overall estate plan to provide a vehicle that not only greatly reduces the gift and estate tax on the transfer of high growth assets to heirs, but also provides a transfer of the growth tax free. Often you can remain as the trustee during the term of the trust to control management of its assets. Not only is the income from the trust paid to charity and not taxed to you, but it may also replace or enhance outright charitable gifts you wish to make.

The gift and estate tax deduction on the original transfer of assets is an Internal Revenue Service calculation based on the fair market value transferred minus the present value of the income stream to charity. The longer the term, the greater the deduction. Although this method is an attractive way to transfer assets to heirs and make a substantial gift to the Church or one of its institutions, it works best when used in estates of approximately $5 million or more.

Like other tools mentioned in this section, the charitable lead trust is most frequently used in conjunction with nongrantor annuity trusts, irrevocable life insurance trusts, Private Foundations or alternate foundations like Donor Advised Funds and Support Organizations, and many other estate-planning vehicles.

Donor Advised Fund

Donor advised funds (DAFs) are becoming a popular way of supporting charities while exercising more control and input than is available with an outright gift. Like a Support Organization, a donor advised fund is regarded as a public charity. It tends to be more flexible than a Private Foundation. The Church's donor advised fund allows you to give your cash or marketable securities at a time that is advantageous for tax purposes, allowing you later to decide which charities you would like to support. You may give all of the proceeds from the fund to the Church and its institutions, or you may choose to give up to 60 percent to other charities of your choice.

The typical donor:

• Has a larger than average estate.
• Wants to time the gift to his or her tax situation.
• Desires to involve the family in gift-making decisions.
• Wants to give now, but not sure which charity he or she wants to benefit.

Gift features and benefits:

• Gift tax deduction based on full market value
• Separates timing of gift with delivery to charity
• Creates philanthropic training ground for the family
• Allows family involvement after your death

How Do I Make a Gift Using a Donor Advised Fund?
A donor advised fund for the Church and its institutions is administered by the Deseret Trust Company. You sign appropriate documents and then transfer cash or marketable securities to Deseret Trust Company. Each year, you and those family members you select advise Deseret Trust Company as to those charitable causes that you wish to receive income and any principal you desire to give. Your decisions may differ from year to year. You should be sure your financial and legal advisors are part of your gift strategy team. Use of a donor advised fund is only effective as a part of an overall financial and estate plan. The professional staff at LDS Philanthropies can assist you and your advisors in participating in the donor advised fund.

Other Facts You Should Know about a Donor Advised Fund
There are many advantages of a donor advised fund:

• Flexibility in timing and where you give: you can make a gift to the Deseret Trust Company donor advised fund and take an immediate charitable income tax deduction; you can choose later those charities that should receive gift distributions and how much they will receive.
• Tax benefits: tax benefits are more favorable than those available by using a private foundation.
• Less complex: you are not required to file separate tax returns or accountings; donor advised funds are not subject to private foundation rules.

There are also some disadvantages of a donor advised fund:

• Limited control: you do not enjoy the same control as you would with a private foundation.
• Reduced charitable emphasis: some for-profit institutions that offer donor advised funds may care more about management of the assets than the gifts created.