BEQUESTS and WILLS
Naming the Pennsylvania Trolley Museum in a bequest in a will or living trust enables you to pass any amount you want to the Trolley Museum free of federal estate tax. Because your gift does not come to the Trolley Museum until after your lifetime, you have control of your assets and reserve the right to make changes. If considering a bequest, please work with your legal and/or tax advisor to incorporate the appropriate language within your will. There are several different ways to make a charitable bequest:
Giving a Specific Amount and Described Property
Designate a specific dollar amount to be given through your will or living trust for charitable use. If you plan to update your will regularly and know that estate funds will satisfy the charitable gift along with other planning, giving a specific amount may be a good option. You may also bequeath a specific described property to the Museum.
Giving a Particular Percentage
You could consider giving a particular percentage of the assets listed in your will to the Pennsylvania Trolley Museum. This way, your charitable allocations will automatically adjust along with the other terms within your will.
Giving All or Part of the Residue
If you are not comfortable with gifting a specific amount or a percentage of your assets, you could arrange for a gift from the residue, or what is left after adequately providing for your family and loved ones. You may designate that all, a specific amount, or a percentage of the remaining residue pass to the Pennsylvania Trolley Museum.
Potential Benefits
- Leave a legacy without giving up assets today.
- Save federal estate taxes on estate plans.
- Control and distribute your assets according to your wishes.
- Ability to make any changes as you think best.
- Provide for your family, as well as your charitable intentions, after your passing.
RETIREMENT ASSETS
The Pension Protection Act of 2006 permits individuals to distribute up to $100,000 from an individual retirement account (IRA) directly to a qualifying charity like the Pennsylvania Trolley Museum without recognizing the assets transferred as income. A qualified charitable distribution is money that individuals who are 70½ or older may direct from their traditional IRA to eligible charitable organizations. The provision has a cap of $100,000 for charitable distributions from individual IRAs each year. Individuals may exclude the amount distributed directly to the Trolley Museum from their gross income.
Retirement plan assets may face double taxation at your passing. If you can make other provisions for your family and loved ones, an option for your retirement plan assets may also be to name a charity as the beneficiary of your retirement account after your lifetime. You can choose to either name the charity as sole beneficiary or provide the charity with a specific amount with the remainder going to your family members. If you split the retirement plan between the charity and your family, the amount designated for the charity will receive the tax benefits.
To name the Pennsylvania Trolley Museum as the beneficiary, consult your advisor, then instruct the plan administrator of your decision and sign the required form.
Potential Benefits
- Eliminate federal income and estate taxes when you name the Pennsylvania Trolley Museum as the primary beneficiary.
- Receive partial savings when you give the Museum a specific amount before giving your family the remainder.
- Make a charitable gift from the most highly taxed assets, leaving better assets for the family.
- Maintain control of your assets and reserve the right to make changes.
LIFE INSURANCE
A gift of life insurance can represent a substantial future gift at relatively little cost to you. Whether you name the Pennsylvania Trolley Museum as owner of the policy, name the Museum as the beneficiary while you retain ownership, or help the Trolley Museum purchase a new policy, your estate will not pay estate taxes on the policy proceeds. We recommend you work with life insurance specialists to develop the right strategy to best accomplish your goals while maximizing your benefits.
Make the Pennsylvania Trolley Museum the beneficiary of an existing policy
If you have a life insurance policy you no longer need to support your spouse, partner or family, you can name the Museum as the beneficiary of the policy, meaning that the Trolley Museum will receive the policy’s death benefit after your lifetime. The value of the policy will be removed from your estate for federal estate tax purposes. You could also name the Museum as a contingent beneficiary and secure your family’s needs first.
Make the Pennsylvania Trolley Museum the owner and beneficiary of an existing policy
Instead of naming the Museum as beneficiary of an existing life insurance policy, you transfer full ownership of the policy to the Pennsylvania Trolley Museum. We will receive the policy’s death benefit after your death. In addition to removing the value of the policy from your estate for federal estate tax purposes, this approach provides you with current federal income-tax deductions when you name the Museum as owner and continue to pay premiums.
Help the Pennsylvania Trolley Museum purchase a new life insurance policy
If you wish to make a substantial future gift to the Museum at a relatively low cost, another alternative is to consider purchasing a new life insurance policy and name the Trolley Museum as the policy owner and beneficiary. You then arrange to pay the premiums through gifts to the Museum. This approach provides federal income tax deductions and the policy proceeds are not included in your estate for federal estate tax purposes. This option would not affect your current life insurance policies that may be needed to provide for your family.