When you support The Arc of the Capital Area upon your death – something we often call a “legacy gift” or “planned gift” — you help ensure this organization continues helping adults with disabilities by expanding and enriching its services and programs. A few ways people make a legacy gift to The Arc of the Capital Area include: naming The Arc of the Capital Area a beneficiary on an individual retirement account; designating The Arc of the Capital Area as a beneficiary on a life insurance policy or annuity; and making a bequest to The Arc of the Capital Area in a last will and testament.
Retirement Accounts
A gift from your retirement account to a charitable organization such as The Arc of the Capital Area certainly benefits the charity, but it may also help neutralize the negative income tax consequences of a required minimum distribution. For example, once you turn seventy-two years old, you are required to distribute funds annually from your retirement account, and this mandatory distribution often creates an income tax burden. Under the Pension Protection Act, federal law allows you to make direct annual transfers of up to $100,000 from an IRA to a charity without treating the distribution as taxable income. If you are older than 70½, you can make a Qualified Charitable Distribution of up to $100,000 from an IRA to a charity without having to pay taxes on this money.
The rules around inheriting a retirement account recently changed with the passage of the SECURE Act in December 2019. The new law requires non-spouse beneficiaries to take all the money out of an inherited IRA within 10 years – meaning the money won’t be able to grow tax-free for nearly as long, and the individual beneficiaries will have to pay income taxes on it sooner. Unlike individual beneficiaries, though, you can list The Arc of the Capital Area as a charitable beneficiary, and whatever amount is distributed to The Arc of the Capital Area avoids the income taxes.
Life Insurance and Annuities using the Beneficiary Form
Naming The Arc of the Capital Area as a beneficiary on a life insurance policy or annuity is a simple way to show your support after your death. Term life insurance policies are generally affordable and are common estate planning tools for many families. By simply naming The Arc of the Capital Area as a partial beneficiary of your existing life insurance policy or annuity, you can provide a significant source of support for the organization. You do not have to change your will to leave The Arc a bequest – just change your Beneficiary Form. You also can change the beneficiary on your IRA or 401(k) retirement account to The Arc of the Capital Area. This is a smarter way to leave money to a charity because The Arc, as a 501(c)(3), does not pay taxes. Again, you do not have to change your will, just the Beneficiary Form.
A Bequest in Your Last Will and Testament
Making a bequest (“gift” or “donation”) to The Arc of the Capital Area in your will is a wonderful way to make a tax-free gift from your estate upon your death. A will is the document that directs where your assets go after you pass away (assets that do not have a beneficiary designation, that is). Always consult an experienced estate planning attorney when making or revising your will, but below is sample language you and your attorney can use to make a donation to The Arc.
Residuary Bequest: [“residue” is a term to describe the share of your estate that remains after your debts, expenses, and any specific bequests to others have been made.] “I give all of the rest, residue, and remainder of my estate to The Arc of the Capital Area or its successor in interest, currently located at 4902 Grover Avenue, Austin, Texas, Tax ID 74-1294429, to be used for its general charitable purposes.”
Specific Bequest: “I give the sum of $______ to The Arc of the Capital Area or its successor in interest, currently located at 1106 Clayton Lane #215E Austin, TX 78723, Tax ID 74-1294429, to be used for its general charitable purposes.”
Donation of Real Estate by Will: “I give the real property described below to The Arc of the Capital Area or its successor in interest, currently located at 1106 Clayton Lane #215E Austin, TX 78723, Tax ID 74-1294429, to be used for its general charitable purposes. The property is commonly known as [ADDRESS] and more legally described as follows: [LEGAL DESCRIPTION OF PROPERTY].”
The samples above are for making donations to be used for The Arc’s “general charitable purposes.” If you prefer for your bequest to go to a particular program (such as Arts & Education, Supported Employment, etc.), you can designate the specific purpose of your gift in your will.
Above are just a few of the many ways to support The Arc of the Capital Area. If you would like more information about these giving options or others, please contact us directly.
Legal Name: The Arc of the Capital Area
IRS Tax Identification Number: 74-1294429
Address: 1106 Clayton Lane #215E Austin, TX 78723
The Arc of the Capital Area is a tax-exempt charitable organization under Internal Revenue Code 501(c)(3).
Please reach out to Annie Wells if you have any questions at awells@arcaustin.org