Charitable bequests or directions can take a variety of forms as outlined below.

— A specific bequest or direction provides an opportunity for the donor to designate a specific amount to Charity. Example: "I bequeath to a Charity all my shares in ABC Mutual Fund to be used for the specific mission of a Charity."

— A general bequest or direction provides an opportunity for the donor to designate a specified dollar amount to a Charity. Example: "I bequeath to a Charity a sum of $50,000 to be used for the specific mission of a Charity."

— A residual bequest or direction provides an opportunity for the donor to designate the balance of his/her estate to a Charity after payment of all estate settlement costs. Example: "I bequeath to a Charity fifty percent (50%) of the residue of my estate to be used for the specific mission of a Charity."

— A contingent bequest or direction provides an opportunity for the donor to designate the residue of the donor's estate, if any, to a Charity only if the donors primary intention cannot be accomplished. Example: "If (my daughter or son) does not survive me, then I bequeath to a Charity all the residue and remainder of my estate to be used for the specific mission of a Charity." This type of bequest ensures that assets will pass to a Charity rather than unintended beneficiaries - including the government.

Credit Shelter Trust (CST)
The Wills of the first to die creates a credit shelter trust in the amount of the adjusted equivalent exemption to which each estate is entitled:

This trust is set up in such a way as to avoid inclusion of those assets — which are not taxed in the estate of the first person to die — from being included in the estate of the second of them to pass into God's Hands. This is a simple device, but the cornerstone of an estate plan. The surviving spouse would be entitled to all the income, and the trustees would be able to invade principal for that spouse's maintenance, support, and health, if necessary. Thus there is no diminution of benefits to the surviving spouse, but because the surviving spouse cannot control the disposition of the trust assets at his or her death, the trust assets are not included in the survivor's gross estate.

Qualified Personal Residence Trust (QPRT)
The personal residence is placed into a Qualified Personal Residence Trust whereby Mr. and Mrs. Grantor retain the right to live in the residence for a term of years with an irrevocable remainder to the children. The value of the gift is discounted by the present value of the retained life estate. Thus, the property is transferred to the children at modest transfer tax cost. The rules are complicated and must be discussed in full with your personal legal counsel prior to this plan being implemented. This trust is an effective method to reduce transfer tax.

Charitable Remainder Unitrust (CRUT)
A portion of the residuary estate may be placed into a charitable remainder unitrust for a term certain of 20 years, the maximum numbers of years permitted by the code. The trust can pay 5%, the minimum payment permitted by the code, of the annual fair market value of the trust assets to your children during this 20 year trust term. Payments are made from trust income and, if income is insufficient, principal is used to make up the deficit. The value of the unitrust assets should continue to increase, and the payments to the children as beneficiaries, the then trust assets are paid to a designated charity. The calculated value of the charitable remainder interest — the charity's right to the trust assets when the trust terminates — qualifies for the estate tax charitable deduction and saves significant Federal estate taxation.

Charitable Lead Annuity Trust (CLAT)
The other portion of the residuary estate then can be placed into a charitable lead annuity trust for a term certain of 20 years, again the maximum permitted by the code, coextensive with the term of the charitable remainder trust, and an annuity amount, a stated percentage of the initial value of the trust assets, is paid to charitable beneficiaries for the 20 year trust term. The then trust assets are received by the children or grandchildren at the end of this trust term. Once the annuity amount has been established, it remains constant for the trust term. This amount is paid out of income and, if income is insufficient, from principal. There is another substantial Federal estate tax deduction — even more substantial then in the case of the charitable remainder trust — which is the present value of the charitable lead interest — the charity's right to the income stream for the 20 year trust term. The two trusts, often referred to as split-interest trusts, operate side by side beginning at the death of the survivor. In the first arrangement, the present income stream is to the children, with the remainder to charity; in the second scenario, the lead annuity trust, the income stream is to the charity, with the remainder to the children. These trusts provide significant tax savings, yet the children have a current income stream and a substantial expectance in the remainder of the lead trust.

These options do save considerable amounts of tax savings and present opportunities to provide more assets for those families for whom a donor has worked a lifetime. In additional, the charity's position is enhanced and should be perceived by the donor as the charity's expressed objective to serve their benefactors. There are various scenarios that would change the family's benefits and also the tax savings. These options must carefully be considered on an individual basis by each donor and his personal advisors.

Donors may review their current need for existing life insurance policies to protect their loved ones or to complete objectives for their future needs. Should a policy of life insurance no longer be required for personal use, a donor may irrevocably transfer the ownership of the life insurance policy to a Charity. The donor then would make annual tax-exempt contributions to a Charity to maintain the required premiums for the continuance of the contract. Should the policy be fully paid-up, the donor then would be entitled to a tax deduction for the actuarial value of the policy upon the irrevocable transfer to a Charity. This option often enables a donor to enhance the endowment needed for the perpetuity of the mission of a Charity and yet remain an affordable way in which to accomplish this expressed objective.

Life insurance also may be used as a replenishment vehicle for the value of gifted assets to a Charity. Example: A donor contributes $25,000 to fund a Charitable Gift Annuity, thus reducing the estate by the fair market value of the gift. The donor then may establish an irrevocable life insurance trust (Crummey v. Commissioner [397 F2d (9th Circuit 1968)]) which would be the new owner and beneficiary of the transferred policy of life insurance and not have the proceeds subject to Federal taxation or probate costs.