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Leaving a Legacy by Will

One of the most common planned giving tools is to leave a gift through your will. It is relatively simple to add a paragraph to your will with named charitable distributions. One way to think about your charities in your will is the “nth-child concept.”

If you are one who has chosen to place your property in a revocable living trust, you can achieve the same result by adding language in the testamentary provisions of the trust – the part of the trust document in which you specify how your property is to be distributed upon your demise.

You should, of course, make such gift designations in consultation with your legal advisor as you draft your will or trust. Below are some samples of wording that you could share with that advisor:

General bequest: “I give to The Cedars, Inc., a Kansas not-for-profit corporation located at 1021 Cedars Drive, McPherson, Kansas, the sum of $ _____________ to be used for its general purposes.”

A specific item of property could be substituted for the dollar amount (hence, in will language, a “specific” bequest).  To maximize tax savings in such instances, consider in-kind gifts to charity of savings bonds or other tax-deferred funds which may produce “income in respect of decedent.” 

Residual bequest: “I give to The Cedars, Inc., a Kansas not-for-profit corporation located at 1021 Cedars Drive, McPherson, Kansas, the rest, residue, and remainder of my estate to be used for its general purposes.”

The above sentence is drafted to give all property in the estate once debts have been paid and other specific gifts have been made. It presumes that general or specific gifts will have been made by the will or trust, which gifts must be satisfied in full before the residuary clause goes into effect. If you wanted to give only a portion of the residue, such percentage language could be inserted. 

Percentage bequest: “I give to The Cedars, Inc., a Kansas not-for-profit corporation located at 1021 Cedars Drive, McPherson, Kansas, ________  percent of my estate, to be used for its general purposes.”

This percentage clause is built on the assumption that the entire estate is being divided on a percentage basis as contrasted with the residual approach illustrated above.  You will note similarities between some of these clauses, depending on the objectives sought by the drafter. 

For other than general purposes: All of the above examples utilize language “to be used for its general purposes.” Alternatively, you could choose to designate your estate gift for a particular purpose, perhaps to The Cedars’ resident assistance fund, or perhaps to a specific building improvement project, for example. If you wish to restrict your bequest to a particular purpose or to an endowment, we urge you to contact us during your planning process to make sure that language is structured that best informs us of your wishes and intentions and that we are able to programmatically carry out your intention. 

Income in respect of a decedent: In drafting testamentary provisions of your will or living trust, you may want to consider the interplay between those testamentary provisions and your designation of assets that could pass outside the probate or trust process. Other than joint tenancy assets, the most notable example for most people is your retirement account. As suggested in a different context above, certain assets produce tax consequences for non-charitable beneficiaries – the income in respect of a decedent (IRD) issue. Designating IRD assets to charity and non-IRD assets to family may be a more tax-efficient solution than the other way around. Please contact us and/or check with your advisor if you have a question about this issue.

EIN: If needed by your advisors, our Cedars EIN is available on request.