A bequest is a provision in a person’s last will and testament or “living trust” that provides for a distribution of specific property or a stated percentage of the probate estate to an individual or an organization. A bequest to the LSLA may reduce or eliminate estate tax liability. Assets one may bequeath include cash, securities such as stocks and bonds, real estate, or other tangible or intangible personal property. A bequest can also be added to an existing will through a simple amendment called a codicil. Sample bequest language for a will or living trust:

I give, devise and bequeath [insert (i) description of asset or (ii) a stated portion of the residuary estate] to the Little Sebago Lake Endowment, managed by the Little Sebago Lake Association, a [insert name type of entity], with an office in Windham, Maine, for its charitable purposes.

I give, devise and bequeath [insert (i) description of asset or (ii) a stated portion of the residuary estate] to the Little Sebago Lake Association, a public charity with an office in Windham, Maine, for its charitable purposes.

Action step: Contact attorney to create or update will or living trust and verify the correct legal name of the intended recipient of the bequest.

The endowment management account, overseen by the Trustees of the Little Sebago Lake Association, can administer charitable gift annuities to benefit the Association. The charitable gift annuity is a simple contract between a donor and LSLA that pays a set amount for one or two lives. The payment rate is fixed and based solely on the age of the donor or donors. At the end of the contract, the remainder is distributed to the named beneficiary ( in this case, the LSLA), to be used for the purpose designated by the donor. These purposes would include any of the educational, and preservation activities carried out by the LSLA. Charitable gift annuities give a donor the opportunity to make a charitable gift and secure a stream of income for life. This planned giving vehicle is most suited for donors who want a secure income stream that will last the rest of their life and for donors who expect to have a high tax liability in the current year.

Minimum amount for a charitable gift annuity is $25,000 and minimum age is 60 years or 50 years for deferred gift annuities.

Action step: To learn more about establishing a charitable gift annuity for the Little Sebago Lake Association contact the Association and they can direct your inquiry to appropriate financial advisors.

Supporters may establish charitable trusts such as Charitable Remainder Trusts (CRT) and Charitable Lead Trusts (CLT) with the help of their attorney. A CRT is a planned gift where the donor irrevocably transfers assets into a trust. The trust pays income to the donor during the term of the trust and pays the remainder of the assets at the end of the trust to one or more charitable beneficiaries. Since a CRT is tax-exempt trust, it may sell property and avoid capital gains tax on the sale of assets. This makes Charitable Remainder Trusts an excellent option for philanthropic donors who desire to sell appreciated assets without incurring capital gains tax.

A CLT is virtually the opposite of a CRT. A Charitable Lead Trust is a planned gift where the donor transfers assets into a trust for a specified time period. The trust makes payments annually to the nonprofit organizations for the term of the trust. At the end of the trust period, the balance is distributed to the donor or the donor’s family. Charitable Lead Trusts are not necessarily tax-exempt entities and therefore might not have the same tax advantages of a CRT. However, a CLT might be the right planned giving option for donors with substantial estates and who anticipate high gift and estate taxes.

Action step: Contact your attorney to create the legal documents or the Little Sebago Lake Association who can direct you inquiry to the appropriate financial advisors.

Naming the Little Sebago Lake Association as a beneficiary or contingent beneficiary of an IRA or other retirement plan could make sense for certain donors. This contribution may allow the donor to mitigate income and estate tax when the charity receives its distribution from the plan.

Through December 31, 2009, holders of traditional and Roth IRAs who were at least 70 ½ years old could make direct charitable transfers up to $100,000 per year without first counting it as income and paying income taxes.

Action step: Contact IRA or retirement plan provider to change the beneficiary or contact the Little Sebago Lake Association to make a direct charitable transfer.

When a life insurance policy is no longer needed to satisfy its original intent (spouse and children well provided for), the policy can become an excellent asset to donate to charity. Not only does the gift avoid estate tax and probate, the cash surrender value of the policy or the cost of a replacement policy is deductible as a charitable contribution. If the donor continues to pay premiums after the gift, these premiums are also deductible.

Action step: Contact life insurance provider and discuss plans with the Little Sebago Lake Association.

Thank you for your consideration.

Please contact the LSLA at (207) 809-4706 with any questions.