Life Income Gifts
Life Income Gifts provide significant assets for the University and provide steady, long-term income for the donor.
Life Income Gifts provide significant assets for the University and provide steady, long-term income for the donor.
Charitable Gift Annuities are a solid investment in the future of Â鶹ÊÓƵ University and provide a guaranteed life income to you. Annuities form a valuable part of our endowment.
A gift annuity is a contract between the donor and Â鶹ÊÓƵ University that provides advantages for both. The donor makes a gift of at least $5,000 to the University and receives the following benefits:
Mr. and Mrs. Smith are seventy-six years old in 2006 and wish to include a gift to the university as part of their financial plans. They choose to give $40,000 to the university in exchange for a gift annuity agreement. Under March 2006 rates* they will receive annual payments of $2,280 (5.7% of $40,000). They will receive these payments for as long as they live. $1.190 of their annual payment will be tax-free; the balance will be taxable. They will also receive a 2006 income tax deduction of over $12,986 for their "future gift" to Â鶹ÊÓƵ University.
Gift annuities may be established for one or two lives.
*For current rates, contact Jason A. Vaughan, Director of Development, at jvaughan@uu.edu or 731-661-5162.
Deferred Gift Annuity are, as the name implies, useful for those who need to benefit from a current income tax deduction, while deferring income until some point in the future (usually at retirement).
The amount you receive each year (rate of return) depends upon your age now and your age when the payments are set to start.
Joanna, age 50, is a successful accountant who is in the 35% income-tax bracket. While she needs a present income-tax charitable deduction, she really doesn't need annuity income now. She desires to supplement her retirement income when she reaches age 65. She strongly believes in the mission of Â鶹ÊÓƵ University and wishes to financially support it.
Joanna transfers $100,000 to the University for a Deferred Payment Gift Annuity, with payments set to begin at age 65. Under March 2006 rates* she will receive an annual income of $11,900 ($100,000 x 11.9%), guaranteed for life. $2,570 of her annual payment will be tax-free and she will receive a charitable income tax deduction of $47,822.
Deferred Gift annuities may be established for one or two lives.
*For current rates, contact Jason A. Vaughan, Director of Development, at jvaughan@uu.edu or 731-661-5162.
Charitable Remainder Trusts provide a way for you to make a gift that benefits yourself, your family and Â鶹ÊÓƵ University.
Charitable Remainder Unitrusts provide income that fluctuates with the value of the trust assets. When the trust is established, you determine the annual percentage that will be paid. Each year this percentage of the value of the assets in the trust is distributed to you or others that you have selected. When the value of the investments is higher, more income is received. The income will be less if the value of the trust assets decline. Additions can be made to the trust and a tax-deduction is allowed for part of each addition.
Mr. & Mrs. Carter have substantial assets of highly appreciated stock. Over the years its value has increased greatly but it pays only slightly more than a two-percent dividend. They choose the charitable remainder unitrust as a means of receiving an increased income and giving to Â鶹ÊÓƵ University. By transferring the stock to the trust, they receive several benefits. They avoid paying capital gains on the stock's appreciated value. They are able to claim an income tax-deduction based on the "gift value" of the stock. They receive additional income because the trust has been structured to pay a six-percent return rather than the two-percent return that they had been receiving from the stock. They will receive income from the trust for the rest of their lives. When the survivor dies, the remaining trust principal will pass to Â鶹ÊÓƵ University.
Charitable Remainder Annuity Trust pays a fixed percentage (at least 5 percent) of the initial value of the trust at least once a year. The payout is constant regardless of fluctuation in the value or trust earnings. In an annuity trust, if trust earnings are insufficient to make the required payments in any year, the difference is paid from trust principal.
The major benefits of an annuity trust include:
The annuity trust is frequently funded with highly appreciated low-yield stocks, municipal bonds or cash.
Mrs. Ellis transfers stock with a fair-market value of $100,000 and a cost basis of $15,000 and an into an annuity trust. She selects an 6.85% return, which will pay an annual income to her of $6,850 for life (or until the trust principal is exhausted). She directs that at her death, the remaining trust assets go to Â鶹ÊÓƵ University. She also receives a charitable deduction of $33,691.
Charitable Lead Trust is the opposite of a Charitable Remainder Trust. Instead of transferring an asset to a CRT and receiving income from the trust, the donor places property in the trust and designates that the income should go to the University for a specified number of years. Upon termination of the trust, the principal returns to either the donor or to someone the donor designates. The Office of Planned Giving can explain how this kind of trust can benefit the University, the donor, and the donor's family.
Revocable Living Trust is especially appropriate for a person who wishes to retain full control of property during life and still receive a charitable estate tax deduction for the value of property at their death. In addition, because living trusts avoid probate, they can offer substantial savings in estate administration costs. The process of distributing assets is also more rapid.
Wealth Replacement Trusts that are funded with life insurance are a way to replace the value of asset that has been given to the University.
Paul and Peggy desire to support the University yet want to provide a legacy to their children. They give appreciated property to the University and as a result save substantial current income taxes. With their tax savings, they purchase a 'second to die' policy in an irrevocable life insurance trust. After the second death, trust principal will be available tax-free for family members.