Planned Giving Resources
What is Planned Giving?
Planned Giving can be defined as the process of making a charitable gift, during a donor’s life or at death, that is part of his/her personal financial plan. Donors who focus on planned giving take advantage of tools and techniques allowable under the Internal Revenue Code that reduce one’s personal income tax liability or ease the burden of federal estate taxes and state inheritance taxes.
Charitable giving provides the best alternative to paying taxes. We can usually offer a charitable giving technique that will offset most, if not all, of the taxes due. This provides a way for people to control where their money will go and how it will be used rather than giving it to the IRS.
Tools and Techniques of Planned Giving
Here are some planned giving tools that might be of benefit to you. Through The Regency Foundation at Cairn University, we provide a broad range of services, including trust and estate administration and trustee services, to help you manage your financial plan in an efficient and professional manner.
1. Gifts of Appreciated Assets
One of the most tax-efficient ways to make gifts to Cairn University is to donate appreciated stock, mutual funds, and other investments that have grown in value over time. The tax benefits include a charitable deduction for the total value at the time of the gift plus avoidance of the capital gains tax. It is almost always more beneficial to donate an appreciated investment than to write a check because of the significant tax savings. We are happy to assist you in executing the transfer of your stock or mutual fund to the University.
2. Gifts of Required Minimum Distributions
For those who are age 701⁄2 or older, annual required minimum distributions (RMD) from retirement accounts can have significant income tax implications. In 2016, Congress made permanent a law that allows donors to transfer up to $100,000 annually from their IRA directly to a university to avoid paying taxes on those distributions for that year. If you are married and filing jointly, your spouse can also contribute an additional $100,000. We can provide your financial advisor detailed instructions on how to properly execute the tax-free distribution to Cairn University.
There are several rules that must be followed carefully to ensure that the distribution is tax-free. For example, a SEP/IRA or 401(k) account is not eligible for this tax-free distribution. To qualify, the distribution must be made directly from your IRA custodian to Cairn University.
3. Donor Advised Funds
Being one of the most flexible planned giving vehicles, Donor Advised Funds are established at a charitable organization such as The Regency Foundation at Cairn University. These funds allow the donor to make charitable contributions and recommend grants from their fund to Cairn. The donor receives an immediate tax benefit.
Funds contributed can be immediately distributed or accumulated for future distributions to the charities of choice. This feature allows donor advised funds to be used as both a current giving and a deferred giving vehicle, depending on how the donor wants it to be used. The Regency Foundation offers this service with certain limitations.
4. Charitable Remainder Trust
These are irrevocable trusts established for the purpose of making a deferred charitable gift while generating an income stream to the donor or other bene- ficiary during his or her lifetime. Upon the death of the donor or at some other triggering event, the remainder is paid to Cairn University. The income paid to the donor can be a fixed amount each year (annuity trust) or a variable amount based on the value of the trust at the beginning of each year (unitrust).
The donor receives an income tax deduction for a portion of the amount deposited into the trust that is determined by the amount of income paid each year and the age of the income beneficiary.
5. Charitable Lead Trust
A Charitable Lead Trust works in the opposite way of the charitable remainder trust. Instead of the income going to the donor each year, it goes to Cairn University. Upon the death of the donor, the remaining balance in the trust is then paid out to his or her heirs.
6. Gifts of Life Insurance and Annuities
Cairn University can accept gifts of individual life insurance policies when the University is named as both owner of the policy and the primary beneficiary. It is expected that the donor will pay all premiums when a life insurance contract is gifted. Some donors purchase a life insurance policy for this specific purpose. A charitable income tax deduction is allowed for any cash value in the policy at the time of the gift. A deduction can also be taken for contributions made to the University to help cover the cost of the premiums each year.
Bequests are a simple yet effective way to give to Cairn University at your death. A bequest is a gift that comes out of your estate by means of naming the University a beneficiary in your will or revocable living trust.
8. Employer Matching Gifts
Many companies offer their employees a charitable gift match- ing program. Some employers match dollar-for-dollar while others give two and three times the amount contributed. You can check if your employer will match your contributions at doublethedonation.com/CairnUniversity.
9. Charitable Gift Annuities
These unique planned giving vehicles involve a contract between a donor and Cairn University. The donor transfers cash or property to Cairn in exchange for a partial tax deduction and a lifetime stream of income from the University. When the donor dies, Cairn keeps the remainder. The amount of the income is determined by such factors as the donor’s age and the current interest rate offered. Cairn University uses payout rates as defined by the American Council on Gift Annuities.
10. Gifts of Real Estate
Another way people give significant gifts to Cairn University is through the contribution of real estate. This can include your personal residence. If your home is gifted, it is possible to retain the right to live in it for the remainder of your life. You may even arrange to get a stream of income while living in the home. These arrangements can be complicated, but they can be very beneficial, especially when there are significant capital gains taxes that would need to be paid if the property was simply sold.
11. Gifts in Kind
It is possible to make a charitable contribution of art and other collectibles. If a donor chooses to make a donation of art, there are several rules that must be followed in order to claim a charitable tax deduction for the gift. We can ensure these rules are carefully followed to provide the maximum income tax deduction for our donors.
Easy Ways to Get Started
1. Change of Beneficiary Forms
One of the easiest ways to get your planned giving strategy started is to simply adjust the beneficiary on such accounts as IRAs and other retirement plans. Cairn University can be added as a beneficiary for some or all of these accounts by simply signing an updated Beneficiary Designation form. Your employer or plan custodian can assist in making this change. We can also provide any needed information to properly complete the form.
2. Transfer on Death Designation
A Transfer on Death (TOD) Designation allows Cairn University to receive proceeds directly from your investment accounts at the time of your death without going through the complication or expense of a probate. This designation allows the account owner to specify the specific percentage of assets that each beneficiary is to receive when more than one is named. Use of this tool helps the executor distribute assets after death with minimal delay and expense. With TOD registrations, named beneficiaries will have no access to or control over a person’s assets as long as that person is alive. Your financial adviser, brokerage firm, or mutual fund company can provide the TOD form and assist in the process of setting it up properly.
3. Payable on Death Designation
Similar to the Transfer on Death Designation is the Payable on Death Designation allowed for bank or credit union accounts. By completing the proper form, you can name one or more beneficiaries, including Cairn University, for any account including checking, savings, or certificates of deposit. Upon your death, the bank or credit union will transfer funds to your designated beneficiaries as soon as they receive proof of death (death certificate). It should be noted that if the account owner dies with unpaid debt or taxes, the account may be subject to claims by those creditors or the government for collection of taxes. You should also be aware that special rules apply in community property states for married account holders.
Estate Planning Checklist
Have a Plan
A will protects your family and estate. Dying without a will means state law determines how your estate will be distributed. The state’s plan may not match your desires.
Update Beneficiaries and Property Titles
Beneficiaries can be named for many assets. Accounts with named beneficiaries supersede your will or trust. Make sure your property is titled correctly and proper beneficiaries are named.
Consider a Power of Attorney
Naming a person to act on your behalf in financial matters can provide a measure of convenience and safety in a time of need. The person named should be someone you trust without question. Please note that a POA becomes null
and void upon your death.
Consider a Heath Care Power of Attorney
You can appoint someone to act on your behalf in health matters and make decisions on your behalf including authorizing specific medical treatments.
Consider an Advance Health Care Directive
Making your wishes known regarding specific medical treatments to be received in the event you are terminally ill or injured will help your family know what to do if you are unable to communicate your wishes.
Leave a Letter of Instruction for Your Executor
Although not legally binding, this can provide valuable information and guidance to your executor. Include information such as the location of accounts, financial advisors, insurance policies, and other important documents, as well as who should be notified in the event of your death.
Ways to give through your will or trust:
Gift a specific dollar amount from your estate.
Gift a specific percentage of your estate.
Gift a specific asset from your estate.
We can assist your estate planning professional with specific language to avoid potential complications when it is time to make distributions from your estate.
We want to ensure your personal intentions are properly carried out.
For more information about planned giving through the Regency Foundation, contact Keith W. Johnson, CFP®, CWS®, Director of The Regency Foundation and Planned Giving Officer, at email@example.com or 215.702.4306.