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Glossary of Planned Giving Terms
[Frequently Asked Questions]
Actuarial
As used in planned giving, refers to the factors used to calculate the value of lifetime payments to individuals or organizations.
Appreciated Property
Securities, artwork, real estate, or any other property that has risen in value since acquired by the benefactor. Generally, appreciated property held by the donor more than a year may be deducted at the full fair market value (subject to certain limitations) with no capital gains tax cost.
Annuity
A contractual arrangement to pay a fixed sum of money to an individual at regular intervals. The charitable gift annuity is a gift that offers fixed lifetime payments to the benefactor and/or another individual.
Adjusted Gross Income ("AGI")
The sum of an individual’s taxable income for the year – the total at the bottom of the first page of the Form 1040. Individuals may deduct charitable cash contributions up to 50% of AGI; they may deduct gifts of appreciated securities and appreciated property up to 30% of AGI. Any unused deductions may be carried forward up to five subsequent years, subject to the same 30% or 50% limitations.
Appraisal
An assessment of the value of a piece of property. Benefactors contributing real or tangible personal property (art, books, collectibles, etc.) over $5,000 must obtain an independent, qualified appraisal of the property to substantiate the charitable deduction.
Basis
The benefactor’s purchase price for an asset, possibly adjusted to reflect subsequent costs or depreciation. If Mrs. Quinn bought stock for $100 per share and sold it for $175, her cost basis in the stock is $100 per share.
Beneficiary
The recipient of a bequest from a will or a distribution from a trust.
Bequest
A transfer of property to an individual or organization from a will.
Capital Gains Tax
A federal tax on property appreciation.
Cost Basis
See Basis, above.
Endowment Fund
The permanently held capital of a non-profit used to support ongoing projects and meet institutional opportunities.
Estate Tax
A federal tax on the value of the property (over the exemption amount) held by an individual at his death (paid by the estate, not the recipients of the bequests). In contrast, state inheritance tax is applied to the value of bequests passing to beneficiaries; it is also paid by the estate before the distributions are made.
Executor
The person named in a will to administer the estate (known in some states as the "personal representative").
Fair Market Value
The price that an asset would bring on the open market.
Grantor
The individual transferring property into a trust.
Income Interest
In a trust, the right to receive payments from the trust for lifetime or a term of years.
K-1 (also 1099-R)
The IRS forms that are sent to life-income gift participants detailing how payments they received from their gifts during the year will be taxed.
Life Income Gift
A planned gift that makes payments to the benefactor and/or other beneficiaries for lifetime, then distributes the remainder to us.
Personal Property
Securities, artwork, business interests and items of tangible property – as opposed to "real property," used in planned giving to refer to land and the structures built on it.
Personal Representative
See Executor, above
Real Property
Land and the structures built on it.
Remainder
In a trust, the portion of the principal left after the income interest has been paid to the beneficiary(ies). A charitable remainder trust pays income to the benefactor or other individuals and then passes its remainder to us.
Remainderman
A legal term for the individual or organization who receives the trust principal after the income interest has been satisfied.
Testator
The individual making the will.
Trust
A transfer of property by the grantor to the care of an individual or organization, for the benefit of the grantor or others.
Trustee
An individual or organization carrying out the wishes of the person who established the trust, paying income to the beneficiaries and preserving the principal for ultimate distribution.
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