A deferred gift is one that will be received by Heathwood Hall in the future.
Examples of deferred gifts include bequests through a will or trust and gifts directed through financial asset beneficiary designation.
A bequest is naming a recipient, like Heathwood Hall, as a full or partial beneficiary in a will or trust. A will or trust ensures that a person’s intentions are clearly expressed and will be followed by an estate administrator.
A trust provides for the distribution of assets without the usual probate administration requirements.
-Specific bequests are usually a stated dollar amount. Specific bequests can also be a gift of stocks or bonds, real estate, or tangible personal property.
-Residual bequests designate a percentage of the remainder of an estate after specific bequests have been fulfilled.
Bequests in a will or living trust are revocable, allowing donors to maintain control and use of their assets during their lifetime.
A bequest may also reduce a donor’s estate tax liability.
There are many types of retirement plans and accounts, including an Individual Retirement Account (IRA), 401(k), 403(b), SEP, ESOP, etc. Qualified retirement plan assets often account for a large portion of a person’s overall net worth and estate.
Qualified retirement plan assets inherited by non-spousal beneficiaries are often one of the most heavily taxed assets in an estate, even if the estate is not large enough to trigger federal estate tax.
As a qualified charity, Heathwood Hall does not pay income tax on gifts received from retirement plan assets. This means the full value of a large portion of your life’s savings will be used as directed by you at Heathwood Hall, increasing the gift’s impact at the School.
Making this revocable future gift is free and easy to do. Your retirement account’s plan administrator or the company that manages the account can help you designate Heathwood Hall as a beneficiary on the plan's beneficiary designation form.
Life insurance policies can be used to make a substantial gift to Heathwood Hall. There are several ways to use a life insurance policy to support Heathwood, including listing the School as a beneficiary of a policy.
If Heathwood Hall is named both the sole owner and beneficiary of a paid-up, whole-life insurance policy, donors may receive an immediate charitable deduction for the lesser of the policy’s fair market value or the policy’s cost basis. In most instances, Heathwood will surrender paid-up, whole-life insurance policies so proceeds may be used immediately.
Under certain circumstances, upon being named owner and beneficiary, Heathwood may find it more advantageous to maintain the policy until the death of the insured person. In this situation, additional premiums paid on behalf of Heathwood are tax deductible.
Additional Beneficiary Designation Gifts
In addition to retirement accounts and life insurance policies, there are other assets whose inheritance is governed by beneficiary designation from a financial institution. These assets include:
■ bank accounts and brokerage accounts with a payable on death (POD) provision; and
■ donor-advised fund assets (depending on the organization that manages the donor-advised fund) remaining at the time of the original donor’s death.
These revocable future gifts are easy to complete — simply sign or update a beneficiary designation form.
Charitable Remainder Trust
Heathwood Hall can be listed as a beneficiary of a charitable remainder trust (CRT), which pays an annual amount to one or more people for a lifetime or a fixed period of years. A charitable remainder annuity trust (CRAT) offers fixed payments to donors based on initial trust value. A charitable remainder unitrust (CRUT) offers payments to donors that vary based on the performance of the trust’s investment portfolio each year. Heathwood receives the remaining trust assets at the donor’s death or the fixed term ends.