< Planned Gifts
Life Income Gifts
Donors may give cash or other property in trust now and realize life
income.
Charitable Remainder Trust
A charitable remainder trust is a versatile gift vehicle. The income
is distributed at least annually to the grantor or a non-charitable
beneficiary. Upon the grantor’s death (or after a specified term
of 20 years or less), the remainder is given to Shenandoah University.
Almost any type of property can be transferred to a charitable remainder
trust and is generally exempt from federal income tax.
Annuity Trust. An annuity trust pays income to beneficiaries
as a fixed, guaranteed payment for life or a term of years determined
at its establishment. Tax advantages include a large charitable income
tax deduction in the year the trust is formed with no capital gains
tax on the transfer of appreciated securities or real property when
the trust is funded.
Unitrust. Like an annuity trust, a unitrust pays income
to beneficiaries for life or a term of years. Unlike an annuity trust,
however, the payout of a unitrust is determined annually as a fixed
percentage of the value of the trust assets, and donors may make subsequent
contributions. Since the income is a percentage of the trust’s
value, a unitrust can act as a hedge against inflation as the principal
increases in value over time. A unitrust qualifies for the same income
tax benefits as an annuity trust when it is funded.
Charitable Lead Trust
Often considered the opposite of the charitable remainder trust, a
charitable lead trust provides payments from income to Shenandoah University
for a term of years. The remainder interest is then returned to non-charitable
beneficiaries. Such trusts must be in either an annuity or unitrust
form. The period of time Shenandoah University receives income is measured
by a fixed term of years, by the lives of one or two individuals or
by some combination of these two methods. A charitable lead trust may
be created during an individual’s lifetime or at his or her death
through a will.
Charitable Gift Annuity
A gift annuity is a contract between a donor and Shenandoah University
under which a donor transfers cash or property to Shenandoah in exchange
for the university paying a fixed sum of money for a period of time
measured by one or two lives. At the annuitant’s death, the remainder
of a charitable gift annuity is distributed to the university. Donors
receive an income tax charitable deduction in the year the annuity is
formed. Payments are fixed at an annual rate for life, and donors may
begin receiving them immediately.
Older donors receive higher income rates as do younger ones who defer
payments for a number of years. Deferred annuities are those for which
Shenandoah’s obligation to pay a guaranteed life income starts
at a future date. The donor receives greater tax savings through a sizable
charitable deduction when working and in a higher tax bracket, than
after retirement when income will probably be lower. Also, capital gains
are not reportable in the year of transfer, as they would be if assets
were sold, but over the donor-annuitant’s life expectancy, starting
when payments begin.
Shenandoah works with commercial annuity providers who offer gift annuities
with a flexible rate, which has a guaranteed income floor of six percent.
Additional income is possible through investments by the commercial
annuity provider in mutual funds, which the donor selects when the annuity
is established. Unlike traditional annuities, the flexible annuity also
permits donors to add to the principal after its creation. Such annuities
are not eligible for current charitable income tax treatment because
they only pass to Shenandoah at the time of death.
Our Development staff welcomes the opportunity to help you and your
financial advisor make a planned gift. Contact Brad Snowden in the Office
of Development at 540-665-5455 or e-mail bsnowden@su.edu.
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