Testamentary Giving Tools

A will has often been described as a road map that gives direction in transferring an asset from one person to another or to a charity. A carefully prepared will is the easiest way to ensure that your heirs are provided for in the way that you intend. It is also one of the simplest ways to make a gift while keeping all your assets available during life in the event your circumstances and needs change. LDS Philanthropies professionals will be happy to work with your professional advisors as they prepare your will and any related documents.

The typical donor:

• Wants to complete a gift while keeping assets available during life.
• Has assets beyond those intended for heirs.
• Wants to memorialize a family member.
• Wishes to start a family legacy of giving.
• Owns assets not suitable as a gift to heirs.

Gift features and benefits:

• Asset values removed from estate
• Allows full use of assets during life
• Flexible and revocable
• Can be a specific property or a percentage of your estate
• Can take effect only after children receive assets

How Do I Make a Gift Using a Will?
The process of making a gift through your will helps you focus attention on the future for both you and your loved ones. A will is often used in combination with charitable trusts, life insurance trusts, family partnerships, or other planning vehicles. Wills can be very complex and should be completed only with help from your legal and financial advisors. LDS Philanthropies' staff of professionals will work in partnership with your advisors to achieve your goals. They can provide such information as the correct legal names of Church entities or the best charitable tools to help you reach your objectives. As we work together, you can be assured that your bequests will be part of a carefully structured plan to provide security for you and your heirs and to help build the kingdom in the way you wish.



Other Facts You Should Know about Wills
Specific bequests are the most common bequests. You leave a specific amount of money, a specific asset, or a specific percentage of your estate to the Church or one of its institutions.

Residual bequests are made to the Church or one of its institutions only after all debts, expenses, taxes, and other bequests have been paid.

Contingent bequests enable you to contribute even if you currently are most concerned with providing for your family, but you anticipate the day when your life's circumstances will allow you to help the Church or one of its institutions. The contingent bequest takes effect only when all other bequests fail (for example, "If my child should predecease me then I leave my entire estate to . . .").



The testator is the one who makes a will.
The executor or personal representative is named in a will to carry out the wishes of the testator. The executor files the will, gathers the assets of the estate, collects income, pays taxes, and distributes the proceeds with the permission of the probate court.

The probate court (or district court) is the state court in which the decedent's will is filed and which oversees the administration of the estate. A will is usually required to be filed in the probate court located in the county of the decedent's permanent residence.

A beneficiary is a recipient selected by the maker of a will to receive property. A beneficiary should not act as a witness to the decedent's will or the bequest to that beneficiary may be voided.

A witness to the will participates in the proper execution of a will and observes that the testator is of sound mind and is not acting under duress, undue influence, or fraud.

One of the most common and flexible ways of providing for your heirs and giving to a charity of your choice is to use a revocable living trust. It is usually created in partnership with a "pour over" will that transfers property into the trust that was not transferred previously. A revocable living trust is a valuable part of your estate plan that avoids probate and yet allows you to revoke or amend its provisions at any time during your life.

A trust is simply a legal entity that can hold and invest property on behalf of beneficiaries. Trusts are administered by a trustee. You may act as your own "self-trustee," or you can choose an individual or corporate trustee to act in your behalf.

The typical donor:

• Wants to complete a gift while keeping assets available during life.
• Has assets beyond those intended for heirs.
• Wants to memorialize a family member.
• Wishes to start a family legacy of giving.
• Owns assets not suitable as a gift to heirs.

Gift features and benefits:

• Asset value removed from estate
• Allows full use of asset during life
• Flexible and revocable
• Can be a specific property or a percentage of your estate
• Can take effect only after children receive assets

How Do I Make a Gift Using a Revocable Living Trust?
The process of making a gift through a revocable living trust helps you focus attention on the future for both you and your loved ones. A revocable living trust is often used in combination with a will, charitable trusts, life insurance trusts, family partnerships, or other planning vehicles.


Revocable living trusts can be very complex and should only be completed with help from your legal and financial advisors. LDS Philanthropies’ staff of professionals will work in partnership with your advisors to achieve your goals. They can provide such information as the correct legal names of Church entities or the best charitable tools to help you reach your objectives. As we work together, you can be assured that bequests made through your revocable living trust will be part of a carefully structured plan to provide security for you and your heirs and to help benefit the Church and its institutions as you desire to do so.

Other Facts You Should Know about a Revocable Living Trust
Ownership of your assets and how title to those assets is held are two of the most important considerations in planning your revocable living trust. Ways in which title to assets may be held include the following:

• Sole ownership is a form of ownership in which the entire interest in the property is held by one individual who has the power to transfer the property to another by will or trust.
• Tenancy in common is a form of title where two or more owners share an undivided interest in the property. A tenancy in common is the customary form of ownership for friends or family members, but not for spouses who own property together. Upon the death of one cotenant, that cotenant's interest in the property can be transferred by will to his or her heirs. Ownership does not automatically pass to the surviving tenants in common, as is the case with joint tenancy.
• Joint tenancy with rights of survivorship is a form of title in which property is automatically transferred to the surviving joint tenants with right of survivorship at the death of another joint tenant. The property cannot be transferred by will or trust.
• Tenancy by the entirety is a form of title that exists in a limited number of states as a special form of joint tenancy held only by spouses. Upon the death of one spouse, the property passes automatically to the surviving spouse.
• Community property is a form of ownership found in the states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In many community property states, all property acquired during a marriage, except property acquired by gift, inheritance, or with separate funds, is presumed to be community property, with each spouse owning one half of the property. Property acquired prior to a marriage is separately owned by the spouse who acquired the property.

Testamentary trusts are trusts that take effect at your death. Although you may desire to make a substantial gift to the Church or one of its institutions, your circumstances may not allow you to complete such a gift until you have provided for your spouse or others. Charitable Remainder Unitrusts, Charitable Remainder Annuity Trusts, Charitable Lead Trusts, Charitable Gift Annuities, and nonqualified trusts can be established by Will or Revocable Living Trust at your death. As an example, you and your spouse can arrange to create a charitable remainder trust when the last of you dies to provide income to your children for 20 years, after which the amount left in the trust will go to benefit the Church or one of its institutions. A substantial part of the value of the asset transferred can avoid estate and gift taxes.

The typical donor:

• Needs assets available during life.
• Wants to benefit heirs first with an income stream followed by a significant gift.
• Creates a gift as part of an overall estate plan.

Gift features and benefits

• Full or partial gift or estate tax deduction
• Flexible estate planning
• All assets available during life
• Revocable during life

How Do I Make a Gift of a Testamentary Trust?
Gifts made through a testamentary trust should be structured as part of your overall financial and estate plan. They can be an integral part of your gift planning and also meet the special needs of your heirs. Because these gift types may be complex, you should always involve your legal and financial advisors to implement a workable plan. LDS Philanthropies' professional staff is available to counsel with you and your advisors in meeting your goals.

Other Facts You Should Know about Testamentary Trusts Testamentary trusts often mesh with other aspects of an individual's overall estate and gift plan. Here are a few related concepts to consider:

• Generation-skipping trust is a trust that transfers payment down to grandchildren. For example, a grandmother creates a trust giving income to her children and the trust assets ultimately to her grandchildren. Because she "skipped" her children and passed the property to the next generation, there are special limitations and transfer taxes that should be considered.
• Incapacity is the lack of legal ability or power to do something. Examples might be a minor child that does not have the legal right to vote or make contracts, or an intellectually handicapped child that has special needs after you are gone, such as income for life.
• Spendthrift trust is a special-needs trust in which a trustee looks after property or other assets on behalf of a person who spends money unwisely. This arrangement protects a person's property against himself or herself, or against creditors.
• Sprinkling trust is a trust that gives the trustee discretion to distribute income to many people at different times. This mechanism is often used to make distributions "as needed" to children or grandchildren for purposes such as schooling or missions.
• Will substitutes include devices such as life insurance, joint-ownership of property, trusts, and other devices to partially eliminate the need for a will.

Life insurance is a valuable gift option that is often overlooked. Life insurance is frequently purchased as part of an overall financial or estate plan. As circumstances in life change, the need for insurance may diminish. A gift of a paid-up policy can provide tremendous benefits to the Church or one of its institutions.

The typical donor:

• Has outgrown the need for the insurance protection.
• Has paid into the policy for several years.
• Wants to insure completion of a significant gift.
• Uses the gift of insurance as part of an overall financial plan.

Gift features and benefits:

• Immediate income tax deduction available to 50 percent of adjusted gross income
• Flexibility in completing various giving plans

How Do I Make a Gift of a Life Insurance Policy with Cash Value?
To transfer ownership of an existing policy to the Church or one of its institutions, obtain a "change of ownership and beneficiary" form from your agent or insurance company. You should complete those portions of the form pertaining to "change of ownership" and "beneficiary designation." The correct name of the Church or one of its institutions must be used (contact LDS Philanthropiess for this information). The appropriate form and a copy of the policy should then be transferred to LDS Philanthropies in behalf of the Church or one of its institutions. The receiving institution must sign the "change of ownership" form as the new owner. If the policy is not "paid up," future premiums are treated as cash gifts to the Church or one of its institutions.


If your are considering a new policy as a gift to the Church or one of its institutions, contact an LDS Philanthropies professional. Each state has different requirements regarding "insurable interests" associated with the right of the charitable recipient to purchase a policy on your life. Some states require that you initiate the policy with a minimum premium payment before you can transfer the policy to the Church or one of its institutions.



How Do I Make a Gift of Life Insurance with Cash Value using Gift-Planning Tools?
A common use of life insurance is to create an “irrevocable life insurance trust” (ILIT) to use in conjunction with the creation of a Charitable Remainder Unitrust. Using this concept, an asset such as raw land is transferred to a charitable remainder trust, sold in the tax-free environment of the trust and reinvested. Income is paid to you, and you "gift" some portion of the income to an irrevocable insurance trust which is owned by your heirs. At your death, the unitrust corpus will go to the Church or one of its institutions and the life insurance in the insurance trust is available for your heirs free of estate and income tax. Charitable planning using these concepts should be undertaken only with the advice and counsel of your financial and legal professionals. LDS Philanthropies’ professional staff will be happy to work with your advisors to help you achieve your charitable goals.



Other Facts You Should Know about a Gift of Life Insurance with Cash Value Two forms of life insurance are typically donated: paid-up "whole life" and "universal life." A whole life policy usually has cash value that may be used for the immediate needs of the Church or one of its institutions. Universal life policies can usually be structured so that premiums will not need to be paid after a period of years.

The charitable income tax deduction for a partially paid-up policy is based on the "interpolated terminal reserve" (ITR) and not the policy's cash value. Use of the ITR for gift valuation purposes is an Internal Revenue Service regulatory requirement. The ITR value is an amount that reflects the daily current value of the policy and is slightly more than the cash surrender value (the amount the insured would receive) if the policy were cashed-in to the insurance company.

A retained life estate deed allows you to donate your personal residence or farm to the Church or one of its institutions while retaining the right to live on and use the property. You may also consider donating a vacation home by this type of gift. When you make the gift, you retain the right to use the property for the rest of your life, a term of years, or a combination of the two. In exchange for your remainder interest gift, you receive an immediate income tax deduction.
The typical donor:

• Wants to make a gift while retaining the right to use his or her property.
• Has income he or she would like to offset with a charitable tax deduction.
• Does not desire to pass personal residence or farm to heirs.

Gift features and benefits:

• Immediate income tax deduction
• Full use of asset during life
• Meaningful gift to charity
• Reduction of gift and estate taxes

How Do I Make a Gift Using a Retained Life Estate Deed with a Personal Residence or Farm?
A gift of a Retained Life Estate Deed to the Church or one of its institutions must be reviewed and evaluated by the Church Real Estate Division. LDS Philanthropies can assist you with this process. A Real Estate Packet of specific information about the personal residence or farm must be completed and sent to LDS Philanthropies. Once a Real Estate Packet is received by LDS Philanthropies, the evaluation process may take 60 to 90 days to complete. This process includes such items as a physical inspection, environmental assessment, title report, appraisal, and so forth. When the evaluation is complete, you will receive notification of the results.

For tax purposes, you must obtain your own appraisal to determine the fair market value you claim on your income tax return. Your tax return must include IRS form 8283 signed by your appraiser.



Other Facts You Should Know about a Retained Life Estate Deed Using a Personal Residence or Farm
While you retain the right to live on and use the property, you continue to be responsible for all routine expenses such as maintenance fees, insurance, property taxes, and repairs. If you later decide to vacate the property, you may rent all or part of the property to someone else, or sell the property in cooperation with the beneficiary institution.