Ways to Give

Giving Wisely: Types of Planned Gifts to the Museum
Bequests
Charitable Gift Annuities
Deferred Charitable Gift Annuity
Charitable Remainder Trusts
Charitable Lead Trusts
Gifts of Retirement Plan Assets
Gifts of Real Estate
Retained Life Estate
Tangible Personal Property
Life Insurance

Bequests

A will is a vital document that protects your family and those you care about. Bequests are provisions in your will or revocable living trust that designate how your assets will be distributed after your lifetime. Charitable bequests can eliminate or reduce federal estate taxes and they are one of the simplest and most flexible ways of giving. You have the option of naming the Museum as the beneficiary of a fixed dollar amount or a percentage of your residuary estate. You can also determine whether you would like your bequest to support the Museum’s Permanent Endowment Fund or its Annual Fund.

Types of Bequests:
• Cash Bequest
You may designate a specific sum of money be given to the Museum in your will or trust.
• Residuary Bequest
In your will or trust, you may designate where the remainder of your estate will go after all other bequests, debts and taxes have been paid. You can designate the Museum as beneficiary of all or a portion of your residual estate.
• Specific Bequest
You may designate that a specific item, such as personal property (real estate, artwork, jewelry, a collection of stamps or coins, etc.) or a certain stock be given to the Museum.
• Contingent Bequest
This is a bequest made on condition that a certain event must occur before distribution to the beneficiary. For example, you may designate the Museum as a beneficiary if your spouse or other heir or legatee predeceases you.

If you would like to include a bequest for the Museum in your will, the following sample legacy language may be helpful:

1. Bequest Clause for the Benefit of USHMM’s Permanent Endowment Fund*
I** hereby give, devise and bequeath [the sum of $_________] [_________% of my residuary estate]*** to the United States Holocaust Memorial Museum, an independent establishment of the United States government, located at 100 Raoul Wallenberg Place, SW, Washington DC 20024- 2126 (the “USHMM”), to be used by it in support of its Permanent Endowment Fund, an unrestricted permanent real endowment fund (or its successor fund, if any) (the “Endowment Fund”), earned income from which is permanently restricted to the Endowment Fund. Distributions from the Endowment Fund shall be made based on USHMM’s adopted spending plan for the Endowment Fund as is then in effect (and as may be modified from time-to-time), and such distributions are to be made in support of the Education and Remembrance Fund, the annual fund of USHMM (or its successor fund, if any), in support of USHMM’s general charitable purposes. The bequest proceeds distributed to USHMM hereunder, including income thereon (including gains and losses (realized and unrealized)), shall be invested in accordance with USHMM’s investment and management policies relating to Endowment Fund assets as are then in effect (and as may be modified from time-to-time), and may be commingled with other USHMM funds for investment purposes. USHMM’s Federal Employer Identification Number is 52-1309391.

2. Bequest Clause for an Outright Gift to USHMM
I** hereby give, devise and bequeath [the sum of $_________] [_________% of my residuary estate]*** to the United States Holocaust Memorial Museum, an independent establishment of the United States government, located at 100 Raoul Wallenberg Place, SW, Washington DC 20024- 2126 (the “USHMM”), to be used by it in support of its Education and Remembrance Fund, the annual fund of USHMM (or its successor fund, if any). USHMM’s Federal Employer Identification Number is 52-1309391.

*A bequest to establish a restricted endowment fund is another alternative. If you are considering such a bequest, it should be discussed with USHMM as early as possible in your estate planning process to ensure that the restrictions you are contemplating are feasible. Please contact George E. Hellman, J.D., Director of Planned Giving, at 202.488.6591 or by e-mail at Ghellman@ushmm.org.

**Insert name and address, if appropriate (for example, “I, [INSERT NAME], residing at [INSERT ADDRESS], hereby….”). This information most likely already will be included at the beginning of the Will, and will not need to be repeated here.

***Bracketed language represents alternate types of bequests—a specific dollar amount, or a percentage of an individual’s residuary estate.

The information provided above is not intended to serve as tax or legal advice. Please consult your attorney and/or financial advisor before making a gift.

Contributions to the United States Holocaust Memorial Museum are eligible for the maximum income and estate tax charitable deductions available for gifts to a public charity.

Sample Legacy Language

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Charitable Gift Annuities

The Charitable Gift Annuity (“CGA”) is a simple form of life-income gift that will pay you and/or someone you choose a fixed income, part of which may be tax-free. In addition, you will receive a generous charitable tax deduction and a reduction in gift and estate taxes. Best of all, your gift will ultimately support the Museum’s Permanent Endowment Fund after your lifetime.

A Charitable Gift Annuity may be structured as either a one-life gift annuity in which you or your designated beneficiary receive the income for life; or as a two-life gift annuity that provides income to you and another beneficiary, such as your spouse. The minimum amount for a charitable gift annuity with the Museum is $5,000. The minimum age is 60 years old.

The annuity rate which you, or you and your spouse/beneficiary, will receive is calculated based upon your age(s) at the time of the gift. The older you are, the higher the annuity rate you will receive. The Museum follows the rates established by the American Council on Gift Annuities.

You will be entitled to claim a charitable deduction on your income taxes in the year you establish a CGA. The amount of your deduction is the present value of the charitable portion of your gift, determined by your age(s), the payout you will receive and the federal discount rate in effect at the time you make your gift. A charitable gift annuity may be established by making an irrevocable gift of cash or appreciated securities (in limited circumstances, other assets may be utilized). If you use securities, you may considerably reduce your capital gains tax liability.

Upon termination of the charitable gift annuity, the remaining principal will be used to support the Museum’s Permanent Endowment Fund or another specified purpose you may have designated.

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Deferred Charitable Gift Annuity

The Deferred Charitable Gift Annuity (“DGA”) is a form of charitable gift annuity that will pay you, you and your spouse, or another individual you designate a fixed annual income starting at least one year after you establish the gift. The minimum gift amount is $5,000, the minimum age to establish a deferred gift annuity is 35, and the minimum age to begin receiving payments is 60.

The Deferred Charitable Gift Annuity is an ideal choice for younger donors or those who have not yet retired, providing a tax deduction now and tax-favored retirement income later. Such a deferred investment can supplement other tax-sheltered investment plans, such as IRAs, 401(k)s, 403(b)s, or Keogh plans. And if you donate appreciated securities instead of cash, you may be able to reduce your capital gains tax liability as well.
You receive a fixed annuity starting at a future date you select. When you defer the payment date, the rate to which you will be entitled may be considerably higher than if you were able to receive payments immediately.

The annuity rate is calculated based upon your age(s) and the length of the deferral period. The longer you defer the payments, the higher your annuity rate will be.
If you defer until retirement, you will receive income when you likely will be in a lower tax bracket than you currently are. Therefore, you will retain a greater portion of the payments after taxes.

You will be entitled to a current income tax charitable deduction for the year you establish the DGA. The amount of your deduction is equal to the present value of the charitable portion of your gift and is determined by the applicable federal discount rate when the gift is completed, the deferral period, and your age(s) at the time of the gift.

To learn more ask us for a free, no obligation illustration of how you might benefit from a Charitable Gift Annuity or a Deferred Charitable Gift Annuity. Call us at 202.314.1748 or e-mail us at planned_giving@ushmm.org or use or Gift Calculator.

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Charitable Remainder Trusts

You establish a charitable remainder trust by making an irrevocable transfer of assets (cash, stocks, bonds or real estate, in most cases) to a trust. The trustee may be a financial institution or an individual of your choice. When appreciated property is contributed to fund the trust, the contributor avoids any initial income tax on the capital gain. The trustee may sell the assets and reinvest the proceeds in a portfolio of stocks and bonds. You and/or a designated beneficiary receive an income for life, after which the trustee distributes the remaining assets to the Museum and any other charities you have designated. You have the choice of setting up an annuity trust which pays a fixed income or a unitrust which pays variable income.

The Charitable Remainder Annuity Trust is a way to avoid the fluctuation in interest rates and ensure fixed income for life. This trust agreement locks in a fixed annuity rate and donors or their designated beneficiaries receive regular annuity payments for life or a period of time not to exceed 20 years. The contributed property is received by the trust at its fair market value, and the annuity rate is multiplied by this value to calculate the periodic payments to the income beneficiaries. In addition, the donor is entitled to a current income tax charitable deduction based on the present value of the remainder interest to the Museum.

The other type of Charitable Remainder Trust, referred to as a Unitrust, may be used to provide a variable payment, based upon a fixed rate multiplied by the value of the assets in the trust, as re-calculated each year. In an inflationary period when trust assets grow, the increasing value of the trust portfolio will result in larger annual payouts.

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Charitable Lead Trusts

You establish a charitable lead trust by transferring cash or appreciated assets such as securities or real estate to the trust. The trustee may be a financial institution or an individual of your choice. Your trust will provide annual income (a fixed amount or a percentage of the trust principal as revalued annually) to the Museum for a period of years. After this term ends, the principal is transferred to your beneficiaries, enabling you to pass significant assets to family members with little or no gift or estate tax.

You may also establish a charitable lead trust under the terms of your will. This is an effective way to make a sizable gift to charity while reducing your estate taxes. We can work with you and your advisor to help determine if a charitable lead trust will meet your financial and philanthropic goals.

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Gifts of Retirement Plan Assets

Many individuals may feel they can't afford to be charitable during their lives. However, with the creative use of excess retirement assets, they are able both to contribute philanthropically as well as provide for heirs. Additionally, the Museum may help preserve or perhaps even increase the amount of remaining assets available for heirs.
As a holder of traditional IRAs, 401(k)s or other qualified retirement plans, you may not realize that you can leave your heirs only a small portion of the remaining retirement monies after taxes. You have not yet paid income taxes on these monies. Therefore, just as IRA withdrawals are taxed during your lifetime, the remaining monies will also be taxed before they are passed to your heirs. However, in addition to income taxes, there are likely to be estate taxes and maybe even generation-skipping taxes also due on these inherited assets. In the end, as much as 65% of your retirement monies may be depleted in taxes.

Once reaching retirement, some individuals have found that they no longer need their IRA assets to maintain their lifestyles. In addition, some people have seen their retirement accounts grow with remarkable returns. Individuals watch their stock-invested IRAs grow faster than they can or want to use them, even with market volatility. As a result, the assets continue appreciating well into retirement years. For example, upper middle-class-individuals may find they have in excess of a half-million dollars of unused IRAs. Finally, few have focused attention on the effect of the significant combined taxes associated with leaving any unused portion of these assets to their heirs. In order to maximize the use of the remaining portion of these assets, consider three charitable approaches.

• Outright Bequest
Name the Museum as the beneficiary of excess or unused retirement assets after your (and/or your spouse's) lifetime. Consider leaving heirs assets less heavily taxed than traditional retirement funds.

• Charitable Remainder Trust After Your Lifetime
Create a Charitable Remainder Trust, naming the trust as the ultimate beneficiary of excess or unused retirement assets. The trust can provide income to your heirs for a period of years after your lifetime and then the trust monies can fund charitable endeavors. Since it is a charitable trust, there is more money available to generate income for heirs. At the end of the trust’s term, the remaining assets are distributed to the Museum to support our mission.

• Charitable Remainder Trust During Your Lifetime
Create a Charitable Remainder Trust during your lifetime, funding it with excess retirement or other assets. The lifetime benefits of the trust may relieve some of the tax burden associated with these assets.

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Gifts of Real Estate

Real estate can be contributed to Museum in ways that afford the donor many benefits.
Donors may convey real estate to the Museum, either as an outright gift or to establish a charitable remainder trust. In the case of an outright gift, the property is transferred by deed to the Museum and is subsequently sold. In the case of a trust, the property is transferred by deed to the trust and the trustee then sells the property and uses the proceeds to pay income to the beneficiaries.

In the case of outright gifts, the donor receives a current income tax charitable deduction based on the appraised fair market value of the property and avoids any income tax on the capital gain. With a charitable remainder trust, the donor also will avoid tax on capital gain and, as an income beneficiary, will receive annual income from the trust that is based on the proceeds of the sale of the property. When the trust is established, a current income tax charitable deduction based on the present value of the remainder interest to the Museum will result.

Lastly, it is possible to convey a fractional interest in real estate (such as a vacation home) to the Museum, thereby allowing a donor to retain use of the property for a portion of each year. This generates an income tax charitable deduction equal to the contributed fractional interest of the fair market value of the property, while guaranteeing the enjoyment of the property for the portion of the year for which the donor retains the right to use it.

We would be glad to explore with you how such a gift might help you combine your charitable and financial objectives. The Museum must review and approve any potential gift of real estate before the transfer of any real property may be finalized.

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Retained Life Estate

Through a retained life estate, you can transfer the deed to your primary or secondary residence or farm to the Museum now, while retaining the right to live there for the rest of your life (this arrangement is known as a life interest or a life estate) or for a specified term of years. You may also provide for another individual to live there for the rest of his or her life. This transfer avoids tax on the value of the property, generates a current income tax charitable deduction and removes the property from the donor’s estate thereby reducing estate taxes.

If, in the future, a donor should decide to move from the home, he or she can relinquish the life estate to the Museum and obtain an additional income tax charitable deduction.

We would be glad to explore with you how such a gift might help you combine your charitable and financial objectives. Once again, the Museum must review and approve any potential gift of real estate before the transfer of any real property may be finalized.

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Tangible Personal Property

Personal property can be contributed to the Museum in ways that afford the donor many benefits. It is possible for the donor to generate productive income from these gifts, while also realizing income and estate tax benefits.

An item of property can be contributed to a charitable remainder trust, which pays income to the donor for his or her life. By selling the property that is contributed to the trust and investing the cash realized from the sale, the trust is able to pay the donor lifetime income.

Taxes are avoided in many ways. By contributing the property to a trust instead of selling it themselves, donors may avoid recognition of the capital gain on the appreciation of the item, thereby avoiding capital gains tax. The trust pays no capital gains tax because it is tax-exempt. Also, the property is removed from the donor's estate, thereby avoiding federal estate taxes.

Trusts can be established with various forms of tangible property. Trusts have been funded with the contribution of a rare musical instrument, a precious gemstone, a diamond ring, and a valuable costume collection. These once unproductive assets now generate significant income.

The benefit of income productivity, accompanied by avoidance of capital gains tax and reduction of estate taxes, makes this a charitable giving transaction of substantial benefit to individuals who have tangible personal property. It is a non-traditional form of charitable giving but one which ought to be considered by donors and their advisors when designing financial and estate plans.

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Life Insurance

You may designate the Museum as a beneficiary of all or a portion of a life insurance policy that has served its original purpose. Many friends find this is a way to make a larger charitable gift than otherwise possible. Your estate may receive a charitable estate tax deduction for the amount of the insurance received by the Museum.

Another option is to name the Museum as the beneficiary and owner of an insurance policy. Designating the Museum as the owner of the policy may entitle you to an immediate income tax deduction. Additional premium payments you may wish to make are also deductible as a charitable contribution.

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