Thinking Ahead

The Arc of Texas has provided quality programs and services to families and individuals with disabilities for over 50 years. So it seems only natural that the community would want to give something back so that similar services are available to future generations.

To provide these services, The Arc has responsibly stewarded and grown its financial resources. Still, our resources are limited. That’s why we’ve established The Arc’s Future Club to ensure the financial stability of The Arc of Texas and continue the development of innovative programs and services well into the future.

Does this forward-looking goal speak to you? Are you a leader? Have you considered how you can contribute to the future of The Arc, now and well beyond your own life? Will you step forward to become a charter member of The Arc’s Future Club?

What are Planned Gifts?

Planned gifts are a variety of charitable giving methods that allow you to express your personal values by integrating your charitable, family and financial goals.

Making a planned charitable gift usually requires the assistance of a knowledgeable advisor such as an attorney, financial planner, or CPA to help structure the gift.

Planned gifts can be made with cash, but many planned gifts are made by donating assets such as stocks, real estate, art pieces, life insurance, annuities, or business interests—the possibilities are endless.

Planned gifts can provide valuable tax benefits and/or lifetime income for you and your spouse or other loved ones. The most frequently-made planned gifts are bequests to charities, made through your will. Other popular planned gifts include charitable trusts and charitable gift annuities.

Why Should I Make a Planned Gift?

Many people want to make charitable gifts but need to do so in a way that helps meet their other personal, family, or financial needs. Planned gifts give you options for making your charitable gifts in ways that may allow you to:

• Make a larger charitable gift than you thought possible
• Increase your current income
• Plan for the financial needs of a spouse or loved one
• Provide inheritances for your heirs at a reduced tax cost
• Reduce your income tax and/or avoid capital gains tax
• Diversify your investment portfolio
• Receive income from your personal residence or farm
• Plan for the transfer of your business
• Leave a charitable legacy for future generations

How Can You Help The Arc of Texas??

You can name The Arc of Texas as the primary or contingent beneficiary on:

• Life Insurance Policies
• Annuity Policies
• IRAs and 401Ks
• Stocks and Bonds
• Business Interests
• Trust Funds
• Real Estate
• Art Pieces
• Trusts
• Wills

Common Misconceptions about Planned Giving

• Only the very wealthy can establish planned gifts.
  • No, there are many ways for families with moderate incomes to leave a legacy for tomorrow without sacrificing their livelihood today.
• Planned giving is for retirees--not for young, working families like us.
  • This is not true. With proper planning and financial advising, ordinary families can establish a lasting legacy.
• Wouldn’t I need to be invested in securities or the stock and bond market to donate?
  • No, there are many ways to donate. The Arc can connect you with an estate planner to help you determine the best option for you.

Making Your Gift

Planned gifts offer a variety of giving methods that allow you to support your favorite charity and at the same time meet financial goals. In addition, these giving structures can be balanced with the needs of your family and the financial security you want to provide them.

While your financial advisor can assist you, the language that could be incorporated in your will or other documents could be as simple as the following example:

“I bequeath to The Arc of Texas (The Association for Retarded Citizens) an organization providing services to people with developmental disabilities in the state of Texas, the sum of _________ dollars($) (or specific insurance policy, trust, stock, or real Property) to be used for its purposes.”

If you wish to add to an existing will, a codicil could be phrased like this:

“I add to my existing will dated _____ the following provisions: I bequeath to The Arc of Texas, an organization that provides programs and services to people with developmental disabilities in the state of Texas, the sum of ________ dollars ($) (or a specific insurance policy, trust, stock, or real property) to be used for its purposes.”

For more information about The Arc’s Future Club and planned gifts, contact Lisa Rivers, Director of Development at The Arc of Texas at lrivers@thearcoftexas.org (512) 454-6694 X116, or 1-800-252-9729.

The Arc’s Future Club members will be recognized in The Arc of Texas building and with your permission, will receive special recognition at periodic events and publications. Leave a permanent legacy for your family, your loved ones, and the entire state of Texas’ families and individuals with developmental disabilities

Make Your Gift Work for You

The following examples show how real people like you used estate planning to establish the best gift to suit their needs. They were able to make the charitable donation they had always dreamt of without sacrificing their financial wellbeing or diminishing family inheritances.

An Incentive to Give
Congress has provided tax incentives for charitable giving—and the savings can be substantial!

EXAMPLE A—Jerry owns $20,000 worth of stock he purchased several years ago for $5,000. If Jerry donates the stock to us, he will be allowed a $20,000 deduction and will save $6,600 on his income taxes.

In addition, Jerry avoids having to pay tax on a $15,000 profit he would have realized had he sold the stock. This means Jerry will save an additional $2,250 ($15,000 x 15% long-term capital-gain tax rate) by giving the stock directly, as opposed to selling it and giving cash. This reduces his final out-of-pocket cost to just $11,150 ($20,000 less $6,600 income-tax savings and less $2,250 capital-gain tax savings).

Creative Gift Planning
Wouldn’t it be nice if some of our resources could do double duty? Here’s a story about how a couple used thoughtful and creative planning to provide a gift to their favorite charity without diminishing the amount they pass on to their family members:

EXAMPLE B—Mr. and Mrs. Jones, both 62, are longtime supporters of the university they attended. For years they have had a dream of creating an endowment in their names, but they are concerned about how such a gift would affect what they have available to pass on to their children.

This year they fulfilled that dream by transferring $250,000 worth of stock to their favorite charity to create the endowment. In their 35% tax bracket, the gift saved Mr. and Mrs. Jones $87,500 in taxes, which they used to purchase enough life insurance to replace the value of the stock they contributed—and they named their children as the beneficiaries. The policy will pay them $250,000 (the value of the stock used to fund the endowment) when both Mr. and Mrs. Jones are gone.

This particular asset-replacement plan utilized what is known as second-to-die life insurance. Since the policy pays only when both the insured persons have passed away, the premiums are typically much lower than they would be for a policy on the life of either person individually. So, we see that it is possible to realize substantial tax saving by removing assets from your taxable estate.

Thinking Ahead
Working with an estate planner today can result in enormous savings in the future.

EXAMPLE C—Helen makes a $500,000 donation in 2008 and uses the tax savings to purchase a life insurance policy with a death benefit of $500,000. She gives the policy to her son, Mark, shortly after she purchases it. Helen dies in 2011 with an estate worth $5,000,000. The life insurance policy, however, is not included in her estate since she gave it to Mark more than three years before.

If Helen had kept her policy and simply allowed the $500,000 death benefit to be paid to Mark as the beneficiary of the policy, her estate would have increased by $500,000 and the inclusion of the death benefit in her estate would have resulted in an additional $275,000 of federal estate tax (55% of $500,000).

Give Tomorrow, Deduct Today