|Charitable remainder trusts
A charitable remainder trust can provide:
- Income for you and/or your beneficiaries for life, or a period of up to 20 years.
- An immediate and substantial income tax charitable deduction, within annual AGI limitations.
- The potential avoidance of current capital gains taxes when the trust is funded with long-term appreciated property.
- Reduction of the donor’s estate to avoid or reduce death taxes.
- A substantial reduction of probate costs and estate taxes.
This type of remainder trust instructs the trustee to pay a fixed income to the donor (and/or beneficiaries) each year for life, and then to transfer the property to the University upon the death of the donor or the beneficiaries.
Charitable remainder unitrust
The charitable remainder unitrust is different from the annuity trust in that the unitrust arrangement has variable income payments that vary with the annual value of the trust. The unitrust must be reviewed each year for its value and a specified percentage of the value is to be paid annually to the beneficiary or beneficiaries. If the value of the trust goes up, the annual payments go up, however, if the value goes down, the annual payments decrease.
One feature of the unitrust is that you may make additional contributions to the unitrust at any time. This is not allowable with the annuity trust.
A gift annuity is an agreement between the donor and our organization under which we agree to pay you fixed payments for life. The amount of the annuity is based on the age of the annuitant and the size of the gift.
This is popular with donors who want a life income plan. People who annually reach their maximum annual retirement plan contributions may consider the deferred gift annuity. With this program, you can receive your income tax deduction during your highest income years, but postpone annuity payments until after retirement, when you may be in a lower tax bracket.
Pooled income fund
The pooled income fund is a charitable trust that operates much like a mutual fund. Your gift is combined with the gifts of other donors and you receive an assigned unit based on the size of your gift. The fund then pays you a quarterly income based on your pro-rated share and the performance of the fund. You receive an income tax deduction for the present value of the remainder interest.
Additional contributions can be made to the pooled income fund at any time.
Charitable lead trust
The charitable lead trust is similar to a charitable remainder trust. In the lead trust, an annual income is paid to a charitable organization, such as the College of Medicine, for a specified period of years. The principal of the trust then passes to non-charitable beneficiaries, often children or grandchildren, and is transferred when the trust expires.
This makes the lead trust a “temporary gift” of income to the charity, eventually passing the property back to individual beneficiaries.
Bequests are popular because they provide the opportunity to leave a legacy. The bequest permits you to retain your property during your lifetime, so there are no out-of-pocket costs. You simply direct that a part of your estate goes to your favorite charities. Your will allows you to direct the use of your estate through bequests.
Charitable bequests are somewhat flexible in that you can leave a sum of money, specific assets or a percentage of your estate after probate and your provision for other beneficiaries. While a bequest offers no income tax benefits, it is fully deductible for estate tax purposes.
It is important to let the College know that you have included them in your estate. This gives us the opportunity to thank you for your generosity, and allows us to help plan your bequest so that you can have the satisfaction of knowing how your legacy will be invested with us.
We will be happy to discuss with you the best way to include the College of Medicine in your charitable giving plans. Always check with your tax and financial advisors before implementing any gift.
For more information, please call Denise Noe, development director, at 815.395.5921, or e-mail email@example.com