Planned giving is a commonly used term in estate planning. Other than some obvious thoughts these words may bring to mind, let's explore what planned giving means to both individuals and their favorite institutions.

Estate planning is the culmination of the financial planning circle for individuals and family units who are committed to distributing the assets they have accumulated to benefit and support charitable organizations. The cornerstone of an estate plan is the will. This document allows you to specify your choice to whom and in what manner you wish to distribute your assets. A properly drafted will can set up an income for life, take advantage of various tax strategies, and still benefit your favorite charities. The wording in your will - including Trusts that may be set forth in the document - will depend on the size of your estate and your philanthropic goals. It is important to consult your estate-planning lawyer to discuss your objectives. There are a number of common forms of planned giving:

Bequests
Gifts by will can enable a person to make significant contributions that may not have been possible during life.

• A general bequest is very popular and designates a specific amount of money to your designated charity.
  
• A specific bequest allows you to designate a dollar amount or a specific property.
  
• A contingent bequest allows your favorite institution to receive your estate if your beneficiaries die before you or with you. For instance, a family of four dies simultaneously in an airplane crash. The two children were the beneficiaries of the parents' estate; however, the parents had the foresight to name their alma mater the contingent beneficiary of their estate. Therefore, the university received their estate after this tragedy.
  
• A residuary bequest gives all or a portion thereof of a person's estate to charity after all other bequests have been satisfied and all debts and expenses have been paid.
  
• The restricted bequest enables you to establish a fund to honor a person or a particular part of an organization. An example of a restricted bequest would be to create an endowment to provide scholarships for young women from your collegiate chapter.

Charitable Remainder Annuity Trust
This Trust enables a donor to make a sizeable charitable gift now, but retain the income that their assets will earn. This Trust allows an individual current tax and financial advantages not available for gifts by will, but also benefits her favorite charity. A Charitable Remainder Annuity Trust is created when you irrevocably transfer securities or money to a charitable organization. For your lifetime (and the lifetime of your beneficiary, if appropriate) the charity pays you an income. In the year you create the annuity Trust, there is an income tax charitable deduction. If your estate is subject to federal estate tax, you may benefit because the assets placed into this type of Trust are no longer counted in your total estate and they become the sole property of the charity.

The Charitable Remainder Unitrust
This is similar to the Annuity Trust except for the way the income is calculated. In a Unitrust, the income received is based on a fixed percentage of the fair market value of the assets each year. Therefore, the income generated from the gift will vary each year. An advantage of both the Annuity Trust and the Unitrust is that there is no capital gain on appreciated securities when you transfer them to the charity to fund the Trust.

Planning Ahead
Because there are many aspects of effective planned giving, the first step is to discuss your goals with a lawyer specializing in estate planning. Your financial and tax advisors should also be part of your estate planning team. Through this identification and planning process, you can take steps to discover your philanthropic goals and income needs for your lifetime, while also taking satisfaction in knowing that you have planned for the best future use of your hard-earned assets.