Popular Gifts

Certain types of assets or accounts are not subject to probate and pass directly to named beneficiaries via documentation on file.  This includes assets like retirement accounts, life insurance, commercial annuities and donor advised funds.  Have you carefully considered your beneficiary designations and how they will play out?  Do these designations currently reflect your wishes?  Have you considered using any beneficiary designated assets as part of a strategic giving plan?

• Commercial annuities - Naming the Museum as the beneficiary of a commercial annuity is a tax efficient way to leave a legacy, as charities receive the full value tax-free, avoiding income taxes on gains that apply to individual beneficiaries.  You can name the Museum as the primary beneficiary for a percentage or specific amount, or as a contingent beneficiary to receive the remaining balance if your first beneficiary does not survive you.  You retain control of the annuity during your lifetime and can change the beneficiary at any time.  You simply update the beneficiary designation form provided by your insurance company or bank.
• Donor Advised Fund - Naming the Museum as the partial or full beneficiary, or successor, of your Donor Advised Fund ensures that your remaining philanthropic assets are distributed to the Museum after your passing.  You can update the successor without changing your will or trust documents.  Reach out to the organization handling your donor advised fund (e.g. Fidelity Charitable, DAFgiving360 (formerly Schwab Charitable) to request their specific beneficiary designation form.  You can also name your donor advised fund as the beneficiary of an IRA, 401(k) or other retirement accounts..  Using a donor advised fund as a beneficiary allows you to maximize your impact by avoiding income taxes on the distribution, as the donor advised fund is a tax-exempt entity.
• Endowed gift - An endowed gift is a permanent, invested donation made to the Museum where the principal amount is held in perpetuity, invested to grow over time, and provides a portion of the investment returns - often 3% to 5% annually - to support specific purposes, such as funding Museum education programs or operational needs.  These gifts provide a stable, long-term sustainable source of funding and are often considered as "the gift that keeps on giving."
• Retirement accounts - Retirement accounts are one of the most common assets that pass by naming a designated beneficiary or beneficiaries.  You can name both primary and contingent beneficiaries and you can have one or more primary beneficiaries as well as one or more contingent beneficiaries.  Naming a retirement account beneficiary is typically part of the required information when opening the account but this information can be updated throughout your lifetime.  Since situations change over time, you should periodically review your named beneficiaries and make changes as needed.  Updating beneficiary designations is a relatively simple process.  Just contact your retirement account administrator for a change-of-beneficiary form, fill it out completely, sign/date and file it with your administrator, then be sure to verify that they have received and processed the information.  Many administrators now allow you to make updates online, but be sure to verify that changes are updated correctly.  There can be significant tax advantages to naming the Santa Barbara Maritime Museum or another charity as a full or partial beneficiary (a specified percentage of account) on a retirement asset such as a regular IRA, 401(k) or 403(b) accounts.  When done properly, charitable donations of retirement assets can minimize the amount of income taxes imposed on both your individual heirs and your estate.  Because inherited IRA assets must be distributed under new rules that require the full amount to be distributed within a 10 year time period, a significant tax burden can be placed on heirs like adult children/other individuals, especially those in higher income categories, thus reducing the spendable amount to them.  And naming your own revocable trust as beneficiary could shorten the required distribution period even further with attendant tax issues. However, charities pay no income tax on retirement account distributions.  Therefore, designating a charity like SBMM is a smart strategy, perhaps allowing you to make a larger gift than you otherwise could.  At the same time, you can preserve other, more tax-friendly assets for family members.