Planned Giving Options
Consider a planned gift when you think about how to support the University of Illinois College of Medicine Rockford currently or how to leave a lasting legacy at the College.
Planned giving encompasses several strategies that let donors meet their philanthropic objectives at the same time that they meet one or more personal financial objectives. With planned giving, income taxes can be reduced, capital gain taxes can be eliminated or deferred, cash flow can be increased, and retirement and estate planning objectives can be furthered. Planned gifts are custom-tailored to fit your own particular financial circumstances and objectives and they often let you make a larger impact than you thought possible.
All gifts for the benefit of the College are made through the University of Illinois Foundation.
All outright gifts give donors an income tax deduction. An outright gift of an asset you’ve held for more than one year that has increased in value over its cost basis also lets you avoid the capital gain tax you would have owed if you had sold the asset and given the cash. Publicly traded stock, closely held stock, mutual fund shares and real estate are the kinds of assets that appreciate in value and are suitable for charitable giving.
Charitable IRA Rollover
A charitable IRA rollover is a gift of cash from your IRA that you authorize your IRA custodian to send directly to the Foundation for the benefit of the College. It bypasses your income tax return, so you don’t report the distribution as taxable income and you don’t claim an income tax deduction for the gift. You must be at least 70½ before your gift qualifies, and a maximum of $100,000 qualifies each year. Your gift can be part or all of your required minimum distribution or it can be in addition to it.
Gifts by will, revocable trust or beneficiary designation are widely used because they occur after your lifetime (when you no longer need your assets for financial security), because they are easy to arrange, and because you can amend your gift at any time during your life if you change your mind or your circumstances change. You simply ask your attorney to change your will or revocable trust or you sign a new beneficiary designation for an IRA or a life insurance policy.
Charitable Gift Annuities
Charitable gift annuities are also popular and also easy to arrange. You make a gift today, and in return a fixed annuity, guaranteed for life, is paid to you, or to you and your spouse. Or, you may name two other annuitants, such as parents or siblings. After the death of the annuitant(s), the residual value of your gift is given to the College, to carry out your purpose for your gift. You can even create a charitable gift annuity in your will or revocable trust for a parent or sibling whom you are supporting now or whose future financial security you worry about. One of the benefits of charitable gift annuities is that annuity payments are partly tax-free, which results in higher after-tax income than you can receive from a bond mutual fund or a certificate of deposit.
Charitable Remainder Trusts
A charitable remainder trust pays an income to you, or to you and your spouse, or to one or more other beneficiaries for life or for a term of 20 years or less. At the end of the term or on the death of the income beneficiaries, the remaining principal of the trust is given to the College, to carry out your purpose for your gift. You fund a charitable remainder trust by executing a trust agreement and then transferring cash, securities or real estate to the trustee. A charitable remainder trust is advantageous for a highly appreciated asset, especially one you wish to diversify because it doesn’t produce income or because you hold a concentrated position in it. The capital gain tax you would have paid if you had sold the asset is not payable currently but is deferred over the term of the trust or the life expectancy of the income beneficiaries. The trustee is thus able to diversify the before-tax value of the asset rather than its after-tax value. Most donors choose a charitable remainder unitrust, which makes variable payments to the income beneficiaries, rather than a charitable remainder annuity trust, which makes fixed payments to the income beneficiaries.
Retained Life Estate
A retained life estate gives you an income tax deduction today for irrevocably giving a future interest in your primary residence or vacation home or farm to the College. In the meantime, you retain the right to live in or use the home or farm for the rest of your life or the lives of you and your spouse or for a term of years.
A bargain sale combines a gift to a charity with a sale to a charity. You sell an asset, such as real estate, to a charity for less than its fair market value. The difference between the fair market value and the sale price is a charitable gift, for which you claim an income tax deduction. The charity pays you cash for the sale portion, either in a lump sum or in installments over a period of years. You would consider a bargain sale with the College if you had an asset you wanted to give but also wanted to realize some value from it.
Charitable Lead Trust
A charitable lead trust makes payments to one or more charities for a term of years; upon expiration of the term, the remaining principal of the trust is distributed to the personal beneficiaries the donor has named. A charitable lead annuity trust makes fixed payments to the charities, while a charitable lead unitrust makes variable payments to the charities. The most advantageous way for you to use a charitable lead trust is to choose a charitable lead annuity trust for the benefit of your children and fund it with cash or with assets that have already appreciated but have the potential to continue appreciating. Doing so lets you turn what could otherwise be a taxable gift to your children into a gift that is largely or wholly free of gift and estate tax.
For further information, visit the Foundation’s planned giving Web site, http://uif.giftplans.org/. To discuss planned giving strategies or to plan your gift, get in touch with Laura Wilhelmi, Director of Development for the College of Medicine Rockford, at (815) 395-5921 or email@example.com.
Always consult your financial planner, accountant or attorney before you make a decision or take action. The Foundation’s Gift Planning Advisors are happy to consult with you and your advisors about planned giving strategies.