Planned giving, sometimes referred to as gift planning, and may be defined as a method of supporting nonprofits and charities that enables philanthropic individuals or donors to make larger gifts than they could make from their income. While some planned gifts provide a life-long income to the donor, others use estate and tax planning techniques to provide for charity and other heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.
These arrangements can:
o Provide for you or your loved ones
o Entitle you to charitable income and/or gift or estate tax deductions
o Enable you to leave a legacy for CAU
1. Types of Planned Gifts:
a. Bequests and Estate Plan Gifts
You may make a bequestor gift through your estate by including a provision in your will or living trust, or by naming CAU as a beneficiary of a retirement plan or life insurance policy. The amount left to the university can be expressed as a dollar amount or as a percentage of the assets to be given.
b. Life Income Gifts
A life income gift allows you to give assets to CAU while providing yourself or others with income for a period of time before CAU is permitted to use your gift. You may make a life income gift by transferring securities, cash, or other property to CAU or a trustee. The university or trustee then manages the investment of the assets and pays an income to you, your designated beneficiaries, or both. Income payments continue for the beneficiaries’ lives or, in some cases, for a term of up to 20 years. There are several kinds of life income gifts available at CAU:
i. Charitable Gift Annuities – In exchange for an outright gift, CAU agrees to contract to pay a fixed amount each year to you and/or another beneficiary for life.
ii. Charitable Remainder Unitrusts – You establish a trust from which you and/or otherbeneficiaries receive variable annualpayments for life and/or a term of years. At the end of the term, the remainderof the trust assets go to CAU for the purposes you designate.
iii. Charitable Remainder Annuity Trusts – You establish a trust from which you and/or other beneficiaries receive annual payments of a fixed dollar amount for life and/or term of years, after which the remainder of the trust assets pass to CAU for the purposes you designate.
iv. Pooled Income Funds – Your gift goes into an investment pool that functions like a mutual fund. Investment returns are paid to you and/or other beneficiaries for life, after which your gift is withdrawn and used to support your designated purpose at CAU.
c. Charitable Lead Trusts
A charitable lead trust makes an annual payment to CAU for a period of years, and at the end of the term, the remaining assets go to your children or other beneficiary.
d. Donor Advised Funds
A donor advised fund allows you tomake a tax-deductible gift to CAU to establish a fund today, and later advisethe university on how you would like the gift used. At least half of the giftmust be designated to CAU, and the rest may support other charities.
2. Assets to Give: Securities, Real Estate, and More
A gift of cash can be a simple way to provide an outright gift, make a bequest, or establish a life income gift, such as a charitable gift annuity, a charitable remainder annuity trust, or a charitable remainder uni trust. Cash gifts may allow you to use more of the charitable income tax deduction in any given year than gifts made with other types of assets.
b. Publicly Traded Securities
Publicly traded securities can be used to make an outright charitable gift. If you give appreciated securities that you have held longer than one year, you are entitled to a charitable deduction from your income tax for that full fair market value of the securities. You also may be able to defer or completely avoid capital gains tax on the securities, depending on the type of gift.Publicly traded securities can also be given to CAU to establish a life income gift or through one’s estate.
Publicly traded securities may be transferred electronically from a brokerage account to CAU.To ensure that your gift is properly credited, if your gift is to establish or add to a life income gift, please contact us before you make the gift.
c. Real Estate
Real estate can be given outright, through an estate or to fund some life income gifts such as the charitable remainder uni trust. Another option is to give CAU a remainder interest in your home while retaining the right to live in it for the rest of your life. You receive a current income tax charitable deduction for a portion of the property’s value.
d. Retirement Plans
A retirement plan can be a very tax-efficient and simple way of including the university in your estate plans. The best method is to name CAU as a primary or secondary beneficiary on your plan’s beneficiary designation form. The tax advantage stems from the fact that most retirement plans (other than Roth IRA’s) are subject to income taxes – and possibly estate taxes - if left to an individual beneficiary; however, a charity that is named as the beneficiary does not pay income or estate taxes on the distribution. Thus, the full value of what is distributed can be used by CAU as a gift from your estate, supporting the purpose you designate.
e. Life Insurance
You can make CAU the beneficiary of a life insurance policy, and your estate will receive a charitable deduction from estate taxes for that gift. You may also, under certain circumstances during your lifetime, make CAU the owner of a life insurance policy on your life, and receive an income tax charitable deduction for a portion of the face value of that policy.