Bequests (in a Will or Living Trust)
The most common form of planned giving, a bequest is made through a will or living trust. Bequests may be stated as a percentage of your estate, as the residual of your estate, or for a specific dollar amount. Since a will can be changed, no income tax benefits are associated with a bequest. However, your estate is reduced by the amount of the bequest for estate tax purposes.
Charitable Trusts and Annuities
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A Charitable Remainder Annuity Trust (CRAT) may be funded through a gift of stock, cash, or other assets. This type of gift provides for a predictable, fixed life-long income for you and your beneficiaries. No additional contributions may be made to a CRAT; however, additional annuity trusts may be established. You may claim a tax deduction for the estimated portion of the assets that will ultimately go to the college.
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A Charitable Remainder Unitrust (CRUT) provides yearly, fluctuating income to you or your beneficiaries for a specified number of years, or for life. Additional contributions may be made to the trust, and upon the death of the last beneficiary, the college receives the principle and uses it in accordance with your wishes. The estimated remainder is tax deductible.
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A Charitable Gift Annuity is a contract between you and the college whereby the college agrees to pay a fixed annuity to a maximum of two beneficiaries (immediately or deferred) in exchange for the irrevocable transfer of assets by you to the college. A portion of the annuity payment may be income tax-free, and an income tax deduction may be allowed for the difference between the value of the gift and the present value of the annuity.
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A Deferred Gift Annuity is similar to a Charitable Gift Annuity in that you make a gift now and receive an immediate income tax deduction. However, in this instance you will begin receiving the annuity payments at a future pre-determined date. Due to the compounding of the gift's income, the amount of the annuity payments can be significantly greater than the annuity payments under the Charitable Gift Annuity.
Pooled Income Funds
Your gifts of cash, securities, or other assets to the college's Pooled Income Funds are combined with the contributions from other donors and invested jointly in a diversified portfolio. You receive the income from the fund proportionate to the value of your contribution and an income tax deduction based on the estimated principle that will be left to the college.
Retained Life Estates
You may transfer the ownership of a personal residence or a farm to the college, while retaining the right to live there for the remainder of your life. You will be entitled to a charitable income tax deduction for a portion of the appraised fair market value of the property at the time of the transfer. In addition, you escape capital gains tax on the property's appreciation and the estate will be entitled to a charitable tax deduction.
Retirement Accounts
You may name the college the beneficiary of the account with the value being fully deductible for estate tax purposes. Tax on income in respect of a decedent is avoided since the University is tax-exempt.
Life Insurance
LAS can be named the beneficiary of a life insurance policy to create a gift of much greater value than the actual money you paid. You may contribute a "paid up" policy to the college and receive an income tax deduction equal to the policy's cash value. Or, a donor can name the Foundation as the beneficiary of the policy resulting in estate tax savings. Or, a donor can name the college owner and beneficiary of a new policy and receive an income tax deduction for the premiums paid.
Charitable Lead Trusts
With a Charitable Lead Trust, the college receives income from the donor's assets for a specified period of time, after which the asset is transferred back to the donor or to the donor's heirs. A lead trust can reduce gift and estate taxes or provide a charitable deduction for the donor.
Please note that each of the deferred gifts is closely regulated by law and requires special arrangements and tax treatment.
