Gifts by Testamentary Pledges

What Is an Estate Note?

• An estate note is an irrevocable pledge or debt against the donor's estate.
• This instrument binds the donor's estate to the extent not paid during the donor's lifetime.
• Estate notes may be pledged for either one or two lives. With a two-life estate note, the obligation is binding only on the estate of the person who lives longer.
• UJA-Federation recommends this option for persons 65 years of age or older.

Benefits of Estate Notes:

• You may make a charitable gift to UJA-Federation after your lifetime without revising your current will or estate plans.
• There is no obligation to transfer assets during the donor's lifetime. However, the estate note offers the flexibility to make payments against the note during one's life.
• Dollar amounts of estate notes count toward fundraising campaigns, while bequest intentions sometimes do not. If UJA-Federation of New York is already in your will, an estate note may be signed for some portion of the bequest you expect to come to UJA-Federation.
• Charitable contributions from estate notes may be designated for specific purposes.
• UJA-Federation of New York's estate note is a single-page document.

Tax Considerations:

• Signing an estate note does not qualify the donor for a charitable deduction.
• Payments against the obligation during a donor's lifetime will provide income-tax deductions in the year made (up to the full amounts permitted by the IRS tax code).
• Unpaid estate note balances will provide the estate with an estate-tax deduction. Any amount outstanding on the estate note is deducted from the gross estate before any taxes are applied.

Want to see a diagram about how gifts by estate note works? View the diagram of this gift

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