Leave Your Legacy with Dignity

Definitions

Charitable Lead Trust

The donor establishes a trust with a defined termination and can contribute cash, securities or real estate. The Lead Trust (which can be a fixed or variable amount) then makes an annual, specified payment to the charity or charities that the donor names as beneficiaries. At the point of termination, the assets are generally distributed to the heirs named as the eventual beneficiaries or to the donor him/her self.

Pooled Income Fund

The Pooled Income Fund is a trust to which donors may make contributions of cash or securities that usually are not large enough to form the basis of an individual trust. However, by commingling gifts of a number of donors the fund will be large enough to benefit from professional management of the fund and amortize expenses over a larger pool of capital. Friends of Mercy is no longer accepting any pooled income gifts into its existing fund.

Unitrust

1. Standard Unitrust provides for payment of income to the donor and/or beneficiaries in an amount equal to a stated percentage of fair market value of the assets of the Trust, revalued annually. The percentage is established at the time the Trust is created and is irrevocable. If annual income and/or appreciation does not equal the committed percentage, principal is used to make up the difference. If there is an excess of income over payments, it is added to the principal. Only assets of the Trust back the commitment to the donor. Assets of St. Joseph's Foundation of San Joaquin are not pledged in support of the trust. Additions may be made to existing trusts.

2. Income Only (With Make-Up) and FLIP Trusts A variation of the basic Unitrust may be used if agreed to by the donor and St. Joseph's Foundation of San Joaquin. When the trust is created, and if stated in the agreement, provision may be made for payment of income only in each year. If that amount does not equal the amount represented by the determined stated percentage, the deficiency may be carried forward and made up in subsequent years. Any excess over the state percentage in later years will be used to make up the deficiency from previous years or if no deficiency exists, will be added to the principal. Under recent regulations, Income Only trusts can at some point, based upon an irrevocable triggering event established in the trust document, flip at the beginning of the next taxable year for the trust. In the flip from an income only trust to a standard trust, it is necessary for the income distribution to be made from principal if earnings and gains are insufficient to meet the required distribution. At the time of the flip, any make-up owed by the trust to the income beneficiaries, is lost.

3. Income Only (No Make-Up) and FLIP Trusts The second variation of the basic Unitrust, if agreed to by the donor and St. Joseph's Foundation of San Joaquin, may provide the income only, up to the stated percentage of assets, will be paid to the donor each year with no make up in subsequent years for a prior deficiency. The excess in any year is added to principal. Under recent regulations, Income Only trusts can at some point, based upon an irrevocable triggering event established in the trust document, flip at the beginning of the next taxable year for the trust. In the flip from an income only trust to a standard trust, it is necessary for the income distribution to be made from principal if earnings and gains are insufficient to meet the required distribution. Donors may also consider a tax-exempt income trust, a charitable remainder net income unitrust with assets consisting entirely of tax-free bonds. The income paid to the donor retains its tax-free status so long as the original contributions to the trust were either cash or unappreciated assets.

Annuity Trust

The donor and/or beneficiary receive annually an amount in dollars fixed irrevocably at the time of the gift and stated in the trust agreement as a percentage of the value of the original gift. The annual payment never changes in value. Income in excess of the annual payment is added to the principal. If the earned income and realized appreciation in any one year is less than the annual payment, the difference comes from the principal. Only the assets of the Trust back the commitment of the beneficiary. Assets of St. Joseph's Foundation of San Joaquin are not pledged in support of the trust. Additions may not be made to existing agreements.

Charitable Gift Annuity

The donor and/or beneficiary receive annually an amount in dollars fixed irrevocably at the time of the gift and stated in the gift annuity agreement as a percentage of the value of the original gift. The annual payment never changes in value. Income in excess of the annual payment is added to the principal. If the earned income and realized appreciation in any one year is less than the annual payment, the difference comes from the principal. All the assets of the Dignity Health System back the commitment of the beneficiary. Additions may not be made to existing agreements.

Retained Life Estate

A gift of a remainder interest in a personal residence or farm is described generally as a transaction in which an individual irrevocably transfers title to a personal residence or farm to a charitable organization with a retained right to the use of the property for a term that is specified in the gift agreement. At the conclusion of the measuring term, all rights in the property are transferred to the charitable remainderman.