Planned Giving

Have you included Planned Giving in your Estate Plan?

What is Planned Giving?

“Planned giving” is not a specific kind of gift. It is commonly used to describe commitments made by donors to transfer capital assets (including cash, stocks, real estate or other forms of personal property) to a qualified religious, educational or charitable organization. It is also known as organized giving or charitable gift planning and often referred to as “leaving a legacy” because most are created to make an impact on our future generations.

It is a process to determine which giving technique that best allows you, the planned Giver, to commit a gift to a specific non-profit organization you have a passionate interest in during your lifetime and/or after your death. This is usually done after you and your family’s needs are adequately taken care of.

In Singapore, tax deduction of 250% is available for qualifying donations to Institution of Public Character (IPCs) and other approved institutions during now till 31 December 2021. This means that for every $1,000 you donate to an IPC, you will receive a tax deduction of $2,500 against your assessable income. The savings from your income tax payable are as follows -

  • If your top marginal tax rate is 5%, you save $125 of tax payable or
  • If your top marginal tax rate is 20%, you save on $500 of tax payable.

For more information about the different types of donations and their respective tax deductibility, please visit Inland Revenue Authority of Singapore (IRAS) website at www.iras.gov.sg.

What you can offer to fund Planned Gifts?

Charitable gifts can be classified into either unplanned or planned gifts.

Unplanned gifts are made without much thought and generally small ranging from donating 50 cents coin into a charity collection bucket to buying some donation draw tickets.

Planned gifts can be of any kind ranging from gift of financial securities (stocks, bonds or mutual funds) to real properties and other possessions like antiques, art collections etc. These gifts are usually of larger amount and made after considerable thoughts and planning on the part of the donor. Planned gifts are either for current use (current planned gifts) or deferred use (deferred planned gifts).

Current planned gifts are given outright and the charity receives the benefits immediately. These gifts may take the form of cash, transfer of securities, life insurance etc.

Deferred planned gifts are usually given to charitable organizations during life or after death of the planned Giver and are made in Wills, Trusts and other estate planning instruments. These gifts are mostly given in a revocable nature i.e. the Giver can revoke all or part of the gift during lifetime. The Giver creates the gift now, but the charity receives the benefit of the gift at some later time (e.g. upon his/her death or at a specified date).

The common types of planned giving vehicles include:-

Revocable Living Trusts

A planned Giver sets up a revocable Living Trust and assigned his/her assets into it. The assets are invested to provide a regular income to a designated charitable organization during the lifetime or after death of the Giver.

As the Trusts is revocable, the Giver can have the security of knowing that he/she can revoke the Trust and take back the assets in times of need.

Life estate arrangements

A planned Giver can deed a home to a charitable organization and reserve the right to continue living in it and using it for life. Upon the Giver’s death, the charity takes possession of the home.

Charitable Bequests

The term “charitable bequest” is used to describe anything that a person gives or leaves to charity using his/her estate through a Will or testamentary trust. The Giver can arrange for the charitable organization to receive the bequests by naming it as a beneficiary. Upon the Giver’s death, this asset can be donated outright in a single amount or it can be placed into a Trust and invested to provide a stream of income to the charitable organization.

Beneficiary Designation

Designate a charitable organization as a beneficiary of life insurance policy or Central Provident Fund (CPF) savings. The designated charity will receive the specified assets upon Giver’s death. The Giver has the option of changing the beneficiary during his/her life.

What you need to consider in Planned Giving?

  1. Do you have adequate resources for your retirement or when faced with emergencies?

    Before making current gifts, you need to ensure that you have sufficient assets leftover for retirement years and in the event of unexpected emergencies like accident, illness or permanent disability.
  2. How much do you want to leave to your family and loved ones?

    Consider the amount of assets to be set aside for your family and loved ones before making current gifts.
  3. Are you confident that the charitable organization will be around when your last wishes are read?

    The charitable organization you choose for Planned Giving should have a good track record of corporate governance and has staying power to receive your lasting legacy.
  4. Consider the charitable organization’s mission, goals and activities.

    Do you have a passion or support the mission, goals and activities of the charitable organization? What are the accomplishments of the organization so far?
  5. Does the charitable organization have guidelines on how planned gifts will be spent?

    Does the organization have any guidelines on how donations received are being spent? Do they just use the money for daily operation or do they invest in building fund/endowment? You should know how the charity plans to use your donation to fulfill its mission so as to give you the assurance that your gifts will be efficiently and effectively utilized.
  6. Is the charitable organization well respected in the community? You would want to be affiliated with reputable charities in the community that you can trust to use your gifts wisely even when you are no longer around to monitor their actions.
  7. Request regular information The charitable organization should provide you with information on their activities regularly through their website, email updates or newsletters.

Why people make Planned Gifts?

Some people make Planned Gifts because they love and care for the interests of the people who are served by the charitable organization. For others, it is an act of thanksgiving for all the spiritual and material gifts that God has given them.

Planned Giving is not just for the wealthy and it is rather simple to arrange a planned gift. Though more sophisticated gifts will require more care, most giving strategies are quite straightforward. Through proper planning, you can surely leave a Legacy and make a difference in lives of others. Your gifts, whether large or small matters!

“If a rich person sees his brother in need, yet closes his heart against his brother, how can he claim that he loves God? My children, our love should not be just words and talk; it must be true love, which shows itself in action” - 1 John 3 : 17 - 18

Will Writing

Trust Planning

Planned Giving

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