Planned Giving

A planned gift may enable you to satisfy personal financial goals in addition to providing HospiceCare with important, long-term support. Donors are often surprised at how planned giving options can increase the impact of their gift. Yet while tailoring a gift to fit your financial, estate and tax plans, you can also gain maximum tax rewards, maintain financial security and make a truly meaningful contribution.

As you consider the following planned giving options, think about not only how much you would like to give, but also what you want to accomplish with your gift. The answers may help you determine the giving option that is best suited to your needs and wishes.

Donors are advised to consult their legal/financial counsel before planning their gifts. Such counsel can help the donor make the largest possible gift to HospiceCare at the least possible net expense. Personal financial circumstances vary considerably and must be carefully considered in order to receive maximum benefits from existing tax laws.

Types of Planned Gifts
Bequests
Life Income Gifts
IRA Rollover
Other Planned Giving Opportunities
HospiceCare Planned Giving Committee

Bequests

• You make a major gift while preserving these assets during your life.
• You reduce your federal estate taxes.
• You leave a legacy of goodwill to your family and community by designating your gift to HospiceCare.

Life Income Gifts

Life income gifts are so named because the donor makes an irrevocable gift to HospiceCare in exchange for life income payments. The difference between various types of life income gifts can be found in the tax benefits each offers.

A charitable gift annuity is an irrevocable agreement between you (the annuitant donor) and HospiceCare. In exchange for your gift—cash, securities or other assets—you, or you and one other person, receive guaranteed, fixed-rate annuity payments for life. Following your death, the remaining balance (annuity residuum) is used either to support HospiceCare’s patient and family services or to help grow our endowment funds. Gift annuities offer several benefits:

• You receive guaranteed fixed payments for life (or from the date of deferment), a portion of which is nontaxable.

• You may claim a charitable income tax deduction for a portion of the gift.
• Your capital gains taxes are reduced if you give appreciated stocks.
• Your estate taxes and probate costs are reduced.

HospiceCare offers two different charitable gift annuities in separate partnerships with the United Way of Dane County Foundation and the Madison Community Foundation (MCF). Each option benefits HospiceCare and the partnering organization. Both annuities share the following similarities:

• You must be at least 60 years of age to be a donor.
• A minimum gift of $10,000 is required.
• Payout rates are based on your age at the time the gift is made—the older you are, the higher the return.
• Annuity payments are predetermined and guaranteed. The rates are established by the American Council on Gift Annuities.

A few differences exist between the two annuities—you can choose the one that best fits your unique interests:

United Way of Dane County

• Fixed annuity payments can be received on a monthly, quarterly, semiannual, or annual basis from the time you make your gift until the time you die.
• Upon your death, HospiceCare receives 90% of the annuity residuum, and the United Way receives the remaining 10%.
• The residuum is given directly to HospiceCare to be used as needed to support patient and family services or applied to our endowment fund.

Madison Community Foundation

• Fixed annuity payments can be received on a monthly, quarterly, semiannual, or annual basis from the time you make your gift until the time you die.
• With a gift of less than $20,000, the residuum is automatically added to the HospiceCare Endowment Fund established and managed by MCF.
• With a gift of $20,000 or more, there are two choices for how the residuum will be distributed:
  - It can be applied to a new fund, named for you or your family, within MCF or
  - It can be directed to the MCF HospiceCare Endowment Fund.

Charitable remainder trusts also provide life income for a minimum gift of $50,000. In turn for the irrevocable transfer of cash or property to a trustee such as the HospiceCare Foundation, you receive a certain percentage or amount of the annual income from the property to you and/or another named beneficiary(ies) for life or for a specified term, not to exceed 20 years. The remainder interest in the property then passes to the HospiceCare Foundation, for the benefit of HospiceCare Inc. There are two types of charitable remainder trusts.

• The charitable remainder annuity trust pays a fixed, guaranteed dollar amount, regardless of the trust’s investment performance. The income rate is determined at the time the trust is funded.
• A charitable remainder unitrust pays the donor a predetermined percentage of the fair market value of the trust’s assets, which are revalued annually. If the trust’s assets increase, the donor receives a larger payment, providing a hedge against inflation. Additional contributions may be made to a unitrust.

Charitable remainder trusts offer several advantages:

• You are entitled to a federal income tax deduction for the value of that charitable remainder interest, based on the number and ages of the beneficiaries and the percentage of payout you and the trustee agree upon.
• If you fund the trust with appreciated property, you recognize no capital gain on the appreciation, and the trust is funded with the full fair market value of the gifted asset.
• You may designate anyone alive at the time of creation of the trust, including yourself and your spouse, as income beneficiary(ies).
• The trust itself is not taxed.
• The burden of investment and management decisions regarding the body of the trust are removed.
• If the trust is funded with cash or tax-exempt securities, the trustee can purchase or retain such securities to produce tax-exempt income for yourself and/or other beneficiaries.
• The asset is essentially removed from your estate, which may mean additional tax benefits.
• You can establish an endowed fund at HospiceCare through the trust.

IRA Rollover

The Pension Protection Act of 2006 allows individuals over 70½ years of age to make tax-free charitable transfers from individual retirement accounts (IRAs) directly to public charities without those funds being subject to income tax and without incurring a penalty for early withdrawal. The advantage of this type of gift is that it is not considered taxable income; however, donors may not claim these charitable gifts as tax deductions. The law allows donors to give up to $100,000 tax-free per year when transferring funds directly from traditional and Roth IRAs during 2008. If you are interested in donating to HospiceCare from your IRA and saving on income tax, we would be happy to assist you with the process before the 2009 deadline. Such gifts will count against the required minimum distribution for IRA purposes. The act states you can transfer money tax-free to a designated fund, a field of interest fund or an unrestricted fund. The transfer must be direct from the IRA trustee. The donation cannot be made tax-free to a donor-advised fund or to a supporting organization. Therefore your charitable donation must be made directly to HospiceCare Inc. and not to the foundation or any other subsidiary of HospiceCare Inc. The fund transfer must come directly from the IRA trustee.

Other Planned Giving Opportunities

Charitable Lead Trusts
A charitable lead trust is the opposite of a charitable remainder trust. Lead trusts are so named because the “lead” income—either a percentage or a specified amount—is paid first to HospiceCare. The donor designates the number of years (either a lifetime or a term not to exceed 20 years) during which HospiceCare receives income from the trust. Unlike a charitable remainder trust, which is a tax-exempt trust, a lead trust pays income tax on its income and capital gains.
At the end of its designated term, a donor lead trust returns the remainder of the trust to the donor. The trust must take the form of either an annuity or a unitrust.

The donor lead trust has two clear tax advantages:
•    You are eligible for a charitable income tax deduction.
•    If the trust is funded with tax-free bonds, the donor may claim a charitable income tax deduction and, because of the tax-free returns, is not taxed on the income.

At the end of its designated term, a non-donor lead trust returns the remainder of the trust to someone other than the donor such as the donor’s beneficiary. The donor does not receive a charitable income tax deduction, but there are advantages that make a non-donor lead trust an attractive option.
•    You receive estate or gift tax benefits, depending on how the trust is established. If it is an inter vivos trust (established during life), the donor obtains a gift tax charitable deduction. If the trust is a testamentary trust (established upon the death of the donor), the estate obtains an estate tax charitable deduction.
•    You can transfer assets to your children at reduced federal estate or gift tax rates.
•    You can take advantage of generation-skipping provisions to pass a considerable amount of property to grandchildren while substantially reducing taxes and benefiting HospiceCare.

Life Insurance
Gifts of life insurance allow donors to make sizeable gifts to the HospiceCare Foundation at a relatively low cost. No other kind of gift can magnify the donor’s original contribution as much as a gift of life insurance. The annual premiums are deductible, if you itemize. There are several ways to give life insurance:
•    You can name HospiceCare Inc. as the primary, secondary, remainder or residual beneficiary of an existing policy.
•    You can establish a new policy and name HospiceCare Inc. as the irrevocable beneficiary.
•    You can donate a policy you no longer need.
•    You can use life insurance to replace the value of gifts to HospiceCare Inc.

Appreciated Real Estate
Significant tax advantages usually accrue to donors making outright gifts of appreciated real estate. Benefits to the donor include a full fair-market value charitable deducation, up to 30 percent of adjusted gross income, with a five-year carry-over provision and no capital gains tax on the property appreciation. Gifts of real estate will be credited at their appraised value at the time the gift is made. HospiceCare reserves the right to either accept or reject any offer of real estate.

Life Estate Gifts
Life estate gifts are gifts of a residence, farm or vacation home. The donor will receive a charitable tax contribution at the time of the gift, and the donor retains a life estate in the property (continues to use the property for life). After the lifetime of the donor, HospiceCare accepts ownership of the property.

HospiceCare Planned Giving Committee

Planned Giving Committee 2009
Julie Bogle-Smith and Gesteland
Sue Collins-M&I Bank
Jim Cripe-Nowlan & Mouat
Anne Fink-Johnson Bank
Sandy Gehler-The Corbett Gehler Group
Carroll Heideman-Madison Metropolitan School District
Rick Langer-Michael Best & Freidrich, LLP
Dan Mohan-Foley & Lardner LLP
Tom Ragatz-Foley and Lardner LLP
Jayme Roth-HospiceCare
Marcia Whittington-HospiceCare