Planned Giving

“A man has made at least a start on discovering the meaning of human life when he plants shade trees under which he knows full well he will never sit.”

D. Elton Trueblood (Former chaplain to both Harvard and Stanford Universities)

Your Personal Philanthropic Goals

Charitable giving can be a benefit for both the donor and the recipient. Begin by analyzing your own philanthropic goals. The chart at right will help you match up your goals with giving options.

Gifts of Income Interest: Charitable Lead Trust

Described as “the gift you get back,” a Charitable Lead Trust (CLT) allows the donor to give income from assets placed in trust to AU Watch for a term of years while retaining the principal for the donor, their heirs or a third party at the termination of the trust. The donor is allowed a federal income tax deduction when the assets held by the trust are to be passed on to the heirs. The deduction is equal to the present value of the income stream given to AU Watch. The CLT is often used to make a substantial charitable gift over time, to maximize charitable deductions in a high-income year or as a “tax smart” method of passing assets to heirs.

Example: John receives a large commission from his company for a special project over and above his salary, creating income tax concerns. John decides to transfer $100,000 of his commission to a CLT. The trust, according to the terms of the trust agreement, makes a $7,000 annual payment to AU Watch each year for 15 years, establishing an endowed fund for growth that will support the general work of AU Watch. When the trust terminates, the asset (commission plus return) is returned to the designated heir or other.

By means of the above scenario, the donor accomplishes the following:

  • Makes a gift totaling $105,000 ($7,000 per year for 15 years) to AU Watch.
  • Transfers the asset to heir or other on the termination of the trust.
  • And reduces the amount subject to gift tax.
Reduce estate taxesarrowBequest
Reduce estate taxes in high-income year
Pass assets to heirs
arrowCharitable Lead Trust
Reduce income taxes
Eliminate capital gains
Increase annual income (fixed or variable)*
* Charitable trusts may increase your annual income depending on the structure of the trust. Your professional advisor can help determine the exact benefits to you


Charitable Remainder Trusts
(Uni- and Remainder)
Defer a gift until after your lifetimearrowBequests, Remainder Trusts
Eliminate life insurance payments on no-longer-needed policiesarrowGift of life insurance
Save taxes from qualified retirement plansarrowGift from qualified plan, other assets to heirs
Divest of real estate or other appreciated assets no longer needed or wantedarrowOutright gift

Gifts of Remainder Interest: Remainder Trust(s)

“Gifts that give back,” Charitable Remainder Trusts (annuity trust and uni-trust) make it possible for the donor to make an irrevocable gift of cash or property while retaining an annual income stream — either a fixed percentage of the trust’s value or a fixed dollar amount — from the trust. Income is paid to the donor at least annually. Donors using this form of gift often increase annual income from the asset given while reducing income taxes and eliminating capital gains if the gift has increased in value.

Example: Susan gives $100,000 in ABC common stock to a charitable remainder trust (CRT) in AU Watch’s name. The stock has a cost basis of $50,000 and pays an annual dividend of approximately 2 percent. The CRT, according to the terms of the trust agreement, makes a 6 percent annual payment during the life of the beneficiary. Upon the death of the income beneficiary, the trust terminates and the trust’s assets are transferred to AU Watch — providing an endowed fund that will support AU Watch for years to come.

By means of the above scenario, the donor accomplishes the following:

  • Makes a major gift to AU Watch.
  • Triples income from the asset given: the stock paid 2 percent in annual dividends, while the trust will provide 6 percent yearly.
  • Avoids federal and state capital gains tax on the appreciated value of the stock ($100,000 with cost basis of $50,000).
  • And receives a federal income tax deduction of $53,095, saving $14,867 in income tax in the year that the trust is established (assuming an income tax rate of 28 percent).

Gifts by Will: A Final Love Letter

One of the most frequently used methods of giving to AU Watch is the gift by will. Donors may make charitable gifts by will outright, residual or on a contingency basis; and a bequest gift can be a simple, effective way to realize your giving goals. The donor’s estate is allowed a tax deduction for the amount contributed. Gifts are revocable if circumstances change.

  • General: Direct a sum of money or a percentage of estate.
  • Specific: Direct a specified item of property.
  • Residual: Direct a portion of the estate after other distributions (to family and other heirs).
  • Contingent: Direct a portion of the estate if primary intentions cannot be satisfied.

Example: Ellen and Tim have no children. After leaving a percent of their estate to nieces and nephews, they remember the children of Africa, leaving the residual of the estate to a school in Malawi.

If you have remembered AU Watch in your will, please let us know so that we may thank you. Those who share their intent (and wish to be recognized) will be listed in our annual report, receive special mailings and become a member of the AU Watch Legacy Society.

Double Tax Gift: Gifts of Retirement Plan Assets

Recognizing that undistributed assets in qualified retirement plans can be subject to both the estate tax and an income tax when left to heirs other than a surviving spouse, donors may choose to designate undistributed assets of qualified retirement plans to AU Watch and leave other assets to heirs.

Example: Max has a qualified retirement plan in place that he has contributed to over his work career. No income taxes have been taken from this plan. He makes his gift to AU Watch from this fund, eliminating income and estate taxes. He gifts cash and other assets that have generated past income taxes to his heirs, family and friends. With a reduction in taxes, Max may make a larger gift to AU Watch if he calculates the taxes that would have been paid at his death.