Types of Planned Gifts
Following are brief descriptions of some of the most widely used planned gifts:
The Bolles School has been the recipient of bequests, both large and small, from alumni and friends over the years. Bequests often come in the form of specified amounts of cash or other property, a percentage of the overall estate, or all or a portion of the residue ("what's left" after specific bequests have been fulfilled) and may be made by adding a codicil to an existing will. You may use a will in combination with, or to create, the plans of giving described below. Living trusts may also be used in this manner.
Gift Annuity Agreement
Under this plan, you may make a gift to The Bolles School and receive fixed annual payments for life. The size of payments is based on the age(s) of payment recipients(s) when the gift is made; the older the recipient(s), the larger the payments. You are allowed a tax deduction for a portion of the gift amount. For a period of years, only part of the payments will be taxed as income. If stocks or other property that has risen in value (appreciated) is given, the realized capital gains can be reported over a period of time equal to your life expectancy and that of another payment recipient you may name.
Gifts of Life Insurance
Gifts of life insurance are another popular year-end charitable gift. The Bolles School should be named as owner and beneficiary of the policy to receive the charitable deduction. If the policy has a cash value, the donor may take approximately this amount as a charitable deduction. If annual premiums are still due and you continue to pay them, the premiums are tax deductible each year.
Life Estate Agreement
Under a life estate agreement, you may transfer title to a residence or a farm to The Bolles School and retain the right to live there and use the real estate for life. You are entitled to any income it produces and are responsible for upkeep. A tax deduction is available in the year of the gift. At your death, the institution receives the property to use as needed or as you directed.
Charitable Lead Trust
You may set up a trust to provide income to The Bolles School for a period of time you determine: 5, 10, 15 years or more. Then the trust property reverts to you or others in your family, as determined by you. A lead trust can provide significant income or estate tax benefits and is often a way to pass property economically to heirs.
Revocable Charitable Trust Agreement
You can provide for an ultimate gift of real estate, cash or other property, knowing that part or all of it may be returned during your lifetime upon request. Since the property may be returned if needed later, there are no income tax advantages. However, you have arranged a charitable gift without risk to your financial future. Title to the property passes under the terms of the trust agreement. It does not pass through your will and may avoid the publicity or probate. Property passing to charity escapes taxation as part of the estate. The income from the trust during your lifetime will be paid to you, another person, or a charitable organization, as you direct.
Charitable Remainder Annuity Trust/Charitable Remainder Unitrust
Both plans are irrevocable trusts and provide income based on the value of the property given. The annuity trust pays a fixed income, while the unitrust provides a fluctuating income based on a fixed percentage of the trust's annual value. When the trust is created, capital gains tax is often avoided or deferred, and an income tax deduction is available for a portion of the value of the property. There can also be estate tax benefits.
Gifts of Long Term Appreciated Property
When stocks, bonds, real estate, and other appreciated assets are sold, tax is due on any capital gain. One of the only ways to avoid or delay the capital gains tax is to make a charitable gift of the property. When you give appreciated property that has been held long-term, you may take a deduction based on the current value of the property rather than just its cost. The combined benefits of bypassing tax on the capital gain, receiving an income tax deduction, and making a charitable gift can be gratifying.
Increasing Your Retirement Income
Many of the plans described here can be a welcome addition to your retirement plans. If you have property that has increased in value but yields little income, using it to fund a charitable gift plan can help your assets do "double duty." The life income you receive from the gift plan will be based on the full value of your property, not just what would be left after you paid tax on the gain. You will also enjoy tax savings from the deduction you receive when you create the plan. This amount can be invested for greater income. Many middle and upper income persons can increase their income from investment assets by 50% or more, while receiving the satisfaction of making a very meaningful gift in the process.
Advice from legal counsel should be sought when considering planned gifts. State laws govern wills, trusts, and charitable gifts made in a contractual agreement.
Periodically we receive bequests from individuals who have not let us know of their plans. Membership in The Heritage Society is the way we recognize this most significant commitment. If you are contemplating or have already made provisions for The Bolles School in your will, please let us know so we can include you in The Heritage Society. Of course, if you request anonymity, we will certainly honor your wishes.
To discuss a planned gift, you may reach KC Cassell at (904) 256-5015 or firstname.lastname@example.org.