[MUSIC] Before we discus the various planned giving vehicles, it's important to understand common planned giving terminology. This session will provide you with the basic understanding of the commonly used terms. Let's start by defining planned giving. Planned, or deferred, giving refers to a donor's decision to allocate funds to donate at a future date, typically at death. Planned giving is an easy enough term to understand. A donor makes an arrangement for a future gift in the present. Planned gifts are exactly as they sound, planned. They're usually established through wills or trusts. And they can even encompass something like leaving property to an organization. Now let's discuss the common plan giving terminology. The legal jargon surrounding plan giving can be a bit confusing. Here are some commonly used terms. Wills and living trusts, a will, or a testament, is a legal declaration by which a person or testator names one or more persons to manage his or her estate, and provides for the distribution of his property at death. A living trust is an agreement where the trustee holds the legal possession of a fund or assets that belong to another person, the beneficiary and it is created while the person is alive. A codicil is a single legal document that has the power to change a will. It can make changes both small and large. A codicil amends areas of a previously written will. The process has to be handled with the same procedures and formalities as the initial will itself in order to be valid. Charitable bequests, a donor can make a charitable bequest via a trust, will or estate plan. Through a charitable bequest, the donor selects a charity to receive a set gift. Charitable bequest usually organize into three categories, specific amount, percentage or remainder. Specific amount, just as it sounds, in these cases a donor allocates an exact set of funds to an organization. A percentage, a donor can also choose to gift your organization a set percentage of his or her total wealth. Remainder, this is the left overs package. A donor can choose to have a non-privacy any money left after all other bequest are paid out. No matter which category of charitable bequest, a planned gift come from, the gift process is fairly straight forward. Beneficiary and secondary beneficiary, a beneficiary is the person or organization that is legally appointed to receive the benefits or funds as deemed by a will or contract. Just as it sounds, the second beneficiary would receive the benefits after the primary beneficiary passes away. In the case of certain arrangements, an individual can establish a charitable organization as a secondary beneficiary in his or her will. That way, once that donor's primary beneficiary passes away and no longer needs the funds, the money is then gifted to a previously determined organization. Donors do not have to notify a charity of a charitable bequest, they can simply write your organization into their wills, and the charity will receive their gifts after their deaths. Many donors do make their plans known through bequest intentions. This term refers to a donor decision to tell the nonprofit that he or she is planning on leaving a future gift. Knowledge of a bequest is huge for a nonprofit. It can help your organization better steward the individual donor. These donors should receive the same level of care and attention as major gift donors. However it is important to remember that a bequest intention is not a legally binding contract. These donors are not obligated to follow through with these gifts. The bequest intention is not a guarantee. Although statistically, very few donors remove a charity once it is in the estate plan. Split interest gifts, these are half donations or partially given gifts. Split interest gifts are not wholly handed over to the organization. Instead, the owner retains a certain amount of ownership or interest in that asset. Charitable gift annuity, a charitable gift annuity is a simple contract between a charity and the donor. Which states the donor will receive a specific annual payment in exchange for their irrevocable transfer of assets. There's a bit of back and forth with these gifts. It is easy to think about the charitable gift annuity as a process. Let's look at the stages. Number one, a donor gives a nonprofit money. Number two, the nonprofit pays the donor a set income from that sum annually. Number three, the pay period ends usually at the death of the donor. Number four the nonprofit keeps any remaining funds. These gifts are more common with older donors ages 70+. Pooled income fund, a pooled income fund is a gift planned defined by federal tax law that allows a donor to provide payments to themselves or others for life, while making a generous gift to charity. When donor makes a donation to a pooled income fund, their irrevocable gift of cash or securities is invested together with the gifts of all other donors to the fund. Each quarter, their proportional share of the fund's income is distributed to the beneficiaries the donor has named. The amount distributed varies with the funds investment performance. When the last beneficiary of their gift dies, the principal attributable to their gift is removed from the fund and given to the fund's charitable beneficiary to be used for the purposes the donor designated. Charitable remainder trust, a charitable remainder trust is a gift to an organization after the terms of the trust are complete. It is standard for a trust to give its income recipient, or recipients a certain amount of money yearly until the completion of the trust. Once the trust is completed commonly after the death of its income recipients, the remaining funds are given to the organization named in the contract of the trust. Present value, present value is current worth. Present value has different implications in the future. Inflation and a few other factors make it that a current gift with a present value of 50,000 will have a greater worth than a gift in the future of 50,000. When preparing for and considering the implications of planned gifts, the relationship between present and future value needs to be remembered. Non-cash asset, any asset gifted to an organization that is not cash or cash equivalent falls under the umbrella of this term. Popular non-cash assets are life insurance polices, real property and retirement accounts for example. These aren't traditional planned gifts, but the plan giving officer or office usually gets involved with complex assets because they have the expertise to facilitate such gifts. Real property, real property is property that cannot be moved. Land and any additional permanent property on the land are all within the scope of this term. For instance, a 15 acre estate and the house itself on that estate will be categorized as real property. Revocable gifts provide the donor the flexibility to change their plan or intent. Charitable bequests, beneficiary designations are the most common revocable planned gifts. Irrevocable planned gifts are final and the donor can't make changes. They relinquish complete control over the asset gifted. Charitable gift annuities and charitable remainder trusts are the most common irrevocable planned gifts. Outright gifts are irrevocable, including non-cash and real property gifts. This concludes our discussion about the common planned giving terms. You now have the basic understanding needed to discuss the variety of planned giving vehicles and their respective benefits.