WHEEL OF DHARMA SOCIETY
The Wheel of Dharma Society honors those who have included the Tibetan Aid Project in their estate plans or wills.
Read on to learn more about estate planning, wills, and living trusts.
A Message from Judy Rasmussen:
As Tibetan Aid Project's Executive Director, I would be pleased to answer your questions about how to start writing or revising your estate plan, make a planned gift to TAP, or establish a gift that pays you. I would also be happy to tell you about our Wheel of Dharma Society, which honors those who have included TAP in their estate planning.
Get immediate estate-planning and planned-giving help by visiting our Estate Planning Briefings
Philip Murphy, our planned giving specialist, has created several 10-min, easy-to-view VIDEOS about important aspects of estate planning: Do you need a Living Trust? Picking the Right Trustee, Controlling End-of-Life Care, A Gift That Pays You. Easy to listen to and fun to watch as an artist puts Phil's words to drawing. Phil is also available for personal advice to anyone who is including Tibetan Aid Project or the Nyingma affiliated organizations in their estate plan. Please contact us at the TAP offices for the referral to Phil.
1. Frequently Asked Questions
2. Charitable Gift Annuities
3. Why the Tibetan Aid Project?
4. Wheel of Dharma Membership Form
5. Example of Estate Inventory Form
6. Tax Benefit Calculations
7. Glossary of Terms
1. Frequently Asked Questions about planned giving:
Can the Tibetan Aid Project help me get my estate plan done?
How do I include the Tibetan Aid Project in my will or living trust?
What’s the big advantage in making the Tibetan Aid Project a beneficiary of my retirement plan?
What kind of donors should consider a charitable remainder trust?
How can I give my home and keep it, too?
Why does the Tibetan Aid Project need planned gifts?
What should I do if I have already remembered the Tibetan Aid Project in my estate plan?
Please tell me about charitable gift annuities.
Can you provide me with an estimate of my tax and income benefits?
Q. Can the Tibetan Aid Project help me get my estate planning done?
A. Yes. Just ask for our free estate planning kit. The kit includes:
* A readable but authoritative introduction to wills, living trusts, and basic estate planning;
* An Estate Planning Inventory Form to help you get a clearer notion of the worth of your estate;
* Instructions for your family to help them through a difficult time.
* Information on how to remember the Tibetan Aid Project in your estate plan.
Effective estate planning usually takes time, effort, and a good attorney. In the end, your plan will allow your family to avoid the delay, dissension, and needless expense that often occurs when a loved one dies without a Will. Once you have taken care of your family's needs, please consider a thoughtful bequest to the Tibetan Aid Project.
Q. How do I include the Tibetan Aid Project in my Will or living trust?
A. The most common way people remember the Tibetan Aid Project in a will or living trust is through a charitable bequest. You do not have to rewrite your current documents. You simply add an amendment, called a codicil, to your will or living trust. Here is some suggested language you can have your attorney review:
" I give devise and bequeath to the Tibetan Aid Project (tax I.D. 23-7433901), located in Berkeley, California, the sum of ________________________________ dollars ($ _______________) Or state a percentage of your estate, or describe real or personal property, including exact location for the benefit of its general purposes. Or specify the Tibetan Aid Project program you wish to support).
Q. What’s the big advantage in making the Tibetan Aid Project a beneficiary of my retirement plan?
A. A designation in your IRA or other retirement plan may be a very cost-effective way of making a gift to the Tibetan Aid Project. If you leave your retirement plan to your children, they will have to pay income tax on either a lump sum distribution or the income stream from the plan. The Tibetan Aid Project does not pay this tax. Here’s an example of what this can mean to your heirs:
A widower died a few years ago. He left his $300,000 house to charity and his $300,000 retirement plan to his relatives. He should have done just the opposite. The relatives had to pay income tax on the $300,000 in the retirement plan, an $80,000 cost to them. If they had received the home, and the charity had received the retirement plan payment, no one would have paid income tax.
Q. What kinds of donors should consider a charitable remainder trust?
A. Donors who want income for life, bypass of capital gains tax on stock or real estate, reduced taxes, and the satisfaction of providing for a good cause like the Tibetan Aid Project.
First, a few words about charitable trusts generally:
Anything you place in a charitable trust - cash, stock, real estate - is invested by the trustee to pay you income for the rest of your life and, if you wish, pay your heirs for life or for a term of years. After the death of all income beneficiaries, what remains in the trust passes to the Tibetan Aid Project.
Your trust may provide you with some important tax benefits:
1) An immediate income tax deduction for a percentage of your gift. We will be happy to give you an idea of the size of your deduction. We simply need to know the ages of the income beneficiary(ies) and the payout rate of the trust.
2) No tax on the sale of appreciated property. From the donor's point of view, this is often the most important tax benefit. Sometimes thousands of dollars that would have gone in capital gains taxes remain in the trust generating income to the income beneficiaries.
3) The trust principal is not subject to estate tax. Property that might otherwise be subject to federal estate tax, which can be as high as 45%, is preserved from estate tax entirely.
Appreciated real estate is often an excellent asset to place in a charitable trust. Mature investment properties are frequently earning only two, three, or four percent of their fair market value per year. When these properties are sold and the proceeds reinvested by the trust, earnings often increase significantly.
Under ordinary circumstances, owners face substantial capital gains taxes when they sell rental properties or commercial real estate. In some cases personal residences are also subject to capital gains taxes even after the $500,000 exemption has been used. In any case, because your charitable trust will be selling the property, there will be no capital gains taxes due when the real estate is sold. Thus the entire net proceeds from the sale can be reinvested to produce more income for you.
Gifts of appreciated stock are ideal for funding a charitable remainder trust because the stock can be reinvested by the trust for greater income while bypassing capital gains taxes at the time of the sale.
Some people find it useful to give an undivided percentage interest of real estate to a charitable trust rather than all of it. For example, a donor contributed 75% of a vacant lot into a charitable trust. When the lot was sold, about $70,000 came directly to her from the sale while $210,000 remained in the trust. Some of her $70,000 was taxable, but she used the income tax deduction generated by her gift to the trust to offset the tax due on the gain built into the $70,000 she received.
There are two basic types of charitable remainder trusts. An annuity trust will pay you a fixed dollar amount for the rest of your life. A unitrust will pay you a fixed percentage of the trust principal each year, so if the value of the trust principal increases over time, your income increases with it. By law, your trust must pay you at least 5% of principal. You may choose a higher payout rate if you wish, but the higher the payout rate the lower your income tax charitable contribution deduction. Also, selecting the highest rate possible may not work in your best interests for another reason. If trust principal declines under the strain of meeting the higher rate, your income will decline with it. On the other hand, a lower payout rate may allow the principal to grow, and your income will grow with it. Additions can be made to a unitrust at any time, but you can contribute to an annuity trust only once.
Finally, your trust must have a trustee. If you have an individual trust tailored to your circumstances, the trustee can be a commercial institution such as a bank or trust company, an individual with professional experience in trust management, a relative, or yourself. There are some complications in acting as trustee yourself, but it can be done if you understand and comply with IRS regulations. Our organization will be happy to supply you with a list of possible trustees or information on being your own trustee.
The basic advantages of charitable trusts are not difficult to understand:
• diversification of your assets without incurring capital gains taxes
• lifetime income
• immediate income tax benefits
• reduction of estate tax
•the satisfaction of providing for a good cause
There are even ways these trusts can benefit your heirs that we have not covered. But the first thing you should do is find out if a charitable trust makes sense for you.
The Tibetan Aid Project will provide you with tax and income calculations tailored to your particular situation. This will give you and your advisors the information needed to make an informed decision as to whether a charitable trust meets your financial and philanthropic objectives. All information is provided confidentially and without cost or obligation. Our organization deeply appreciates your willingness to help continue its work.
Q. How can I give my home and keep it, too?
A. A charitable life estate agreement allows you to give a personal residence or farm to the Tibetan Aid Project while retaining the right to live there for life. Donors who enter a life estate agreement receive an immediate income tax deduction. The deduction is based on the present value of the home discounted by the estimated length of time the charity must wait to receive the home. To put it simply, a person age 70 will receive a larger deduction than will a person age 50, all other things being equal.
The IRS grants the deduction even though the donor continues to enjoy full use of the home. But the IRS also expects the owner to have full responsibility for the care and maintenance of the home. That's why life tenancy agreements simply continue things as they are currently, with the donor dealing with maintenance, property taxes, insurance and the like. The major benefits to the donor, then, are continued use of the home, an immediate charitable income tax deduction, the avoidance of probate, the avoidance of estate tax on the property, and the satisfaction of making a substantial gift to the Tibetan Aid Project during one's lifetime.
Q. Why does the Tibetan Aid Project need planned gifts?
A. Only gifts from individuals, including bequests from estates, can ensure TAP’s future. These gifts are not subject to a fluctuating economy. They come from individuals deeply committed to the work of TAP and are needed to build TAP’s endowment, the income from which will provide a reliable source of ongoing support to TAP for years to come. They also can provide a lasting tribute to the donors, honoring their names and the names of their loved ones perpetually.
TAP pledges to put to good use the bequests it receives. Guided by the vision of Tarthang Tulku, the Tibetan Aid Project has steadily expanded its capacity to aid Tibetans dispersed throughout Asia as well as those remaining in Tibet. TAP has made significant progress in its primary purpose: to preserve Tibet's heritage and communicate its value for all humanity.
Today, TAP helps produce and distribute precious Tibetan texts and reproductions of sacred art, sponsors traditional ceremonies, provides general assistance to monastic centers, monks, and nuns, and promotes awareness of Tibetan civilization worldwide. TAP's board and staff have worked with great care to ensure the sustainability of programs, address new areas of need, and sustain TAP's integrity and vision as an organization dedicated to humanitarian, non-political ends.
Q. What should I do if I have already remembered the Tibetan Aid Project in my estate plan?
Judy Rasmussen, Executive Director
Tibetan Aid Project
2210 Harold Way
Berkeley, CA 94704
Q: Please tell me about Charitable Gift Annuities
The oldest and best known of charitable gifts that pay donors income for life is the charitable gift annuity described here. Charitable remainder trusts also pay donors income for life, giving them an immediate income tax deduction and relief from capital gains tax. The charitable gift annuity is also guaranteed by the issuing charity. The payments are fixed and so completely predictable. The charitable gift annuity allows you to make a gift to a good cause while giving you a current income tax deduction and payments for life. In this way, some donors discover they can make a far more generous future gift to the Tibetan Aid Project than they thought possible.
A gift annuity is simple to create. You fund your annuity with a gift of cash or stock. You are then paid a guaranteed fixed amount monthly, quarterly, semiannually or annually for life. You must be at least 65 when the payments begin and your annuity must be created with gifts having a total value of at least $10,000.
Your gift annuity can provide payments for one or two lives. Both plans generate an immediate charitable tax deduction and partially bypass capital gains tax. In addition, part of your payment will be tax-free and all of your gift will pass to the Tibetan Aid Project free of estate tax.
The Tibetan Aid Project Gift Annuity Program: the Tibetan Aid Project’s gift annuity program appeals to those who prefer predictable payments to variable income. A the Tibetan Aid Project gift annuity provides fixed guaranteed payments to donors along with the satisfaction of making a significant future gift to the agency. Annuity rates vary with age. The older you are, the higher your rate. Payments, once established, remain the same for life.
The following are some current single-life annuity rates:
Here’s an example: Mary Edwards, age 75, establishes a one-life gift annuity contract with $10,000. In exchange for her gift, the Tibetan Aid Project pays her $710 annually for life. For up to twelve years, $460 of her $710 payment is tax-free. She also receives a $4,496 charitable income tax deduction.
Q: Can you provide me with an estimate of my tax and income benefits?
GLOSSARY OF TERMS
Bequest: A disposition of property by will, more broadly, any legally binding statement that disposes of property at death.
Benefits to Heirs: Charitable remainder trusts, and other income producing charitable instruments, can provide heirs or friends with income for life or a term of years. The donor can name a child or other individual as a successor income beneficiary when the donor sets up a charitable trust and names the child or friend as a successor income beneficiary. The donor must make sure that the successor income beneficiary is not so young that the charitable trust will be disqualified.
Codicil: An addition to a Will that explains, modifies, or revokes a previous will provision or that adds an additional provision. A codicil must be signed and witnessed with the same formalities as those used in the will’s preparation.
Capital Gain: The difference between the original price and a higher selling price after something has been held for at least one year. For example, stock purchased for $10 and sold at least one year later for $100 has a capital gain of $90. The gain is subject to capital gains tax.
Charitable Deduction: A deduction from both estate tax and gift taxes for all assets given to charity. Life time gifts can, if properly structured, also qualify for an income tax deduction. Charitable remainder trusts and charitable gift annuities both generate charitable deductions.
Charitable Gift Annuity: A contract between a donor and a charity that obliges the charity to pay an agreed upon payment for life in return for the donor’s gift. Whatever remains after the donor’s death is then used by the charity to support its work. Along with the income tax deduction, the donor also receives an immediate charitable income tax deduction and partial bypass of capital gain tax. Click for information about the Tibetan Aid Project’s gift annuity program
Community Property: A method of holding title to property of married persons. All income earned after marriage is usually community property. Each spouse owns an undivided one-half interest.
Estate Planning: A legal process that allows you to determine how your assets will be managed for your benefit if you are unable to do so, when certain assets will be transferred to others, either during your lifetime, at your death, or sometime after your death, and to whom those assets will pass. Estate planning also addresses your welfare and needs, planning for your own personal and health care if you are no longer able to care for yourself. The basic tools of modern estate planning are wills, living trusts, durable powers of attorney for property management, and advance health care directives. Ask for the Tibetan Aid Project’s free Estate Planning Kit to get you started.
Gift Tax: Tax imposed on taxable gifts made during life. Gifts to individuals are taxable if they exceed a certain amount, $12,000 in 2007, for example. Gifts to qualified charities are not subject to tax and are also tax-deductible.
Heirs: Generally, those persons who would inherit by Intestate Succession.
Income Tax Benefits: With charitable remainder trusts, donors receive an immediate income tax deduction when they transfer assets to the trust. The deduction is determined by IRS tables. A tax deduction less than 10% of the face value of the trust will disqualify the trust. The key factors in determining the deduction are (1) the ages of the income beneficiaries when a gift is made to the trust and (2) the payout rate of the trust. Care must be taken to make sure the deduction is large enough to satisfy the requirements of the IRS. In general, the older the income beneficiaries, the greater the income tax deduction, and the lower the payout rate the higher the income tax deduction.
Example: Alice Jones, 78, deeds her home to a favorite charity while retaining the right to live in the home for life. Ms. Jones is said to have entered into a Charitable Life Estate Agreement. By irrevocably transferring ownership of her home to charity, Ms. Jones receives a substantial income tax deduction. The deduction is reduced by the value of her life estate, that is, her right to continue to have use of the home. She also must continue to maintain the home in good repair and pay all ordinary expenses, including insurance and property taxes.
Tax and Income Calculations: The Tibetan Aid Project will provide you and your advisers with estimates of tax and income benefits your may receive by establishing a charitable remainder trust, a charitable gift annuity, and other types of charitable vehicles. All information is provided confidentially and without cost or obligation. Contact Rosalyn White at 510-848-4238 or
Intestate: If you don't have a Will, you are said to die "intestate."
Intestate Succession: Statutory system setting forth which relatives will receive the estate of a person who died without a Will.
Inventory Form: A form that allows you to list what you own in preparation for meeting with an estate planning attorney. Please see the following example if you would like to review a typical inventory form.
Wheel of Dharma Society: The Wheel of Dharma Society of the Tibetan Aid Project honors those who have included the agency in their estate plan by listing them, by name or anonymously if they wish, on the Wheel of Dharma Society honor roll. Wheel of Dharma Society members are invited to special events from time-to-time. If you have already included the Tibetan Aid Project in your estate plan, we would be honored to enroll you in the Wheel of Dharma Society. Please contact Rosalyn White or Judy Rasmussen at 510-848-4238 or e-mail to
Lifetime Income: With charitable trusts, the payments made to the trust’s individual income beneficiaries, usually for life. Payments can also be established for a term of years rather than for life.
Living Trust: An entity created by execution of a document entitled Trust Agreement. The person who creates the document is the Trustor. The Trustor transfers most of his or her assets into the trust during his or her lifetime. Living trusts are also referred to as “Revocable Trusts,” “Revocable Living Trusts” and “Inter Vivos Trusts.” A Living Trust is revocable and amendable by the Trustor, that is, the person who established the trust, during the lifetime of the Trustor, and all assets can be removed by the Trustor at any time. Upon the Trustor's death, the Trust assets pass to the persons named in the Trust, without probate.
Payment Rate: Used with charitable trusts, the stated payment rate to the trust’s income beneficiaries. The rate must be at least 5% but not so high a rate that the charitable income deduction generated by the trust would be less than 10% of the trust's value when funded.
Stepped-Up Basis: For income tax purposes, assets of a decedent get a new basis equal to fair market value at date of death. This means that, when the property is sold by an heir, there will be little or no capital gains tax because the capital gain is the difference between the basis and the fair market value.
Testate: If you have a Will, you are said to die "testate."
Trustee: The person who is in charge of administering the Trust (i.e. making investments, distributing the trust income and principal pursuant to the provisions in the Trust Agreement). During the Trustor's lifetime the Trustor is usually the Trustee. If the Trustor becomes incapacitated or dies, then the next person named in the Trust Agreement to be Trustee becomes the Trustee.
Undivided Percentage Interest: A stated percentage of a whole property, rather than a specifically defined part of a whole: “They decided he would own a 50% undivided percentage of the house rather than own the second floor only.”
“It makes me happy to include the Tibetan Aid Project in my estate planning because I have witnessed their remarkable work in developing and supporting important Tibetan cultural preservation projects. I have seen first hand the results of their work in my travels to Tibet and India and I feel confident that my gift will be used wisely and efficiently, given the selfless dedication and mindful caring of the staff.”
Wheel of Dharma Society Member
“For almost twenty years the Tibetan Aid Project has helped with printing and distributing the sacred texts of Tibet. For thirty-five years they have been supporting Tibetan Culture. That’s why I included a bequest to TAP in my will. I agree with them when they say that the preservation of the Tibetan Buddhist teachings not only benefits Tibetans, but all of Humanity.”
Wheel of Dharma Society Member
Please fill out the Contact Us form for more information about the Wheel of Dharma Society.