charitable gift annuity
director of planned giving
KEEPING YOU UP-TO-DATE:
The IRA Rollover is in effect for gifts made in 2013. The legislation extending the IRA rollover also included provisions concerning (1) income and capital gains tax rates, (2) the estate and gift tax exclusion, and (3) a variety of other exclusions and deductions. If you have questions about these changes, please contact:
Robyn Hill, Director of Planned Giving
540-432-4971 (office) or
Planned Giving Options
Ways to Give
charitable gift annuities
- Kenton and Shirley Brubaker are receiving a guaranteed life income as result of having a charitable gift annuity with EMU. They say their gift annuity is an ‘excellent way to express our appreciation to EMU for giving us a great education and a satisfying place of employment.’ They are also Jubilee Friends, donors who have included EMU in their estate plans. Find out how a gift annuity would work for you…
- A fixed dollar amount. This is a great choice when the gift is for a particular purpose, such as establishing a named endowed scholarship.
- A percentage of your estate. This is especially helpful when your estate is going to be shared among several beneficiaries and you want to be sure each of them benefits from increases in the estate and none gets cut out entirely by decreases.
- The remainder (meaning whatever is left after other gifts have been completed). This allows you to take care of other priorities and then use whatever is not needed for those purposes to help EMU continue its mission.
It is always best to work with an attorney that you know and trust when establishing a charitable gift through a will or trust.
Similar gifts can be made by designating EMU as a beneficiary of a retirement plan or insurance policy. In those cases, it is best to work with the company that manages the plan or policy.
You may choose to fund your charitable gift annuity with cash or other assets (such as appreciated stock or other securities). The benefits of charitable gift annuities include:
- Secure fixed income for life. The annuity rate is determined by the age(s) of the recipient(s). This means that charitable gift annuities work particularly well for older individuals for whom higher rates mean higher current income.
- Income payments that are partially tax-free. Tax-free income means more can be used for daily needs.
- Other possible tax benefits. Donors who itemize deductions may benefit from an income tax deduction in the year of the gift. Those who fund charitable gift annuities with appreciated assets may also benefit from special treatment of capital gains.
The amount remaining after the charitable gift annuity matures will be used as you direct to support the programs at EMU.
Charitable remainder trusts are often funded with real estate or appreciated stock, and provide significant tax benefits. In addition, these trusts offer many different options to meet your specific planning needs. For example:
- Term. Income payments may be made for life or for a specific number of years (up to 20 years).
- Payments. The income may be either a fixed dollar amount or a variable payment based on the value of the trust assets. You may also choose to receive only the amount actually earned by the trust at first and then switch to receiving a percentage of the value.
- Income beneficiaries. Income may be paid to or among one or more individuals of your choosing.
- Charitable beneficiaries. The assets remaining when the trust matures may be distributed among one or more charities as you direct.
- A charitable lead trust can be an excellent planning tool if you are concerned about the effects of estate taxes upon your heirs.
- There are several ways to structure these trusts depending on your goals and circumstances.
- Income Tax Deduction. If you have held the securities for at least one year and itemize your deductions, you may be able to take an income tax deduction for the value of the securities.
- Avoid Capital Gains. By transferring the securities directly to EMU (rather than selling them and making the gift with cash), you avoid having to pay capital gains tax on the increase in value.
Appreciated securities can also be used to establish a gift annuity or charitable trust which may provide additional benefits to you and your loved ones. Gifts of appreciated securities held in the broker’s name may be made by wire transfer. Sample letters to broker and EMU.
Gifts of Stock or Other Securities
Wire transfers may be used for gifts of stock or other securities held in broker’s name.
- Appreciated Securities. If the securities are appreciated, transferring securities directly to EMU may allow you to claim a deduction for current value of securities and avoid paying capital gains on the appreciation. (If the securities you intend to transfer are not appreciated, you may want to sell the securities and instead give the cash to EMU, so that you can use the loss to offset other taxes.)
- Valuation. The value of your gift will be the average of the high and low prices of the stock on the date the transfer to EMU is completed. Your broker will be able to provide this information.
- Stock Certificates. If you have stock certificates, please contact the EMU development office toll-free at 800-368-3383.
Gifts of Cash
Wire transfers may also be used for gifts of cash. This may be especially beneficial in connection with gifts from an IRA, which must go directly from the account holder to EMU in order not to be included in your income.
- Charitable Estate Tax Deduction. Your estate can take a charitable deduction for the value.
- Income Tax Avoidance. If you leave your retirement account balance to individual heirs, those heirs will have to pay income tax when they receive the distributions. As a tax-exempt organization, EMU will not have to pay those taxes.
- Individual Heirs Keep More. By choosing to make your charitable gifts using retirement fund balances, you help your individual heirs avoid unnecessary taxes and keep more of what you give to them.
If you are age 70½ or older, you may also be interested in the IRA Rollover program.
- Substantial Gift. Naming EMU as the beneficiary of such a policy allows you to make a substantial gift to EMU that will benefit students for many years without reducing investment assets.
- Income Tax Deduction. If you also choose to name EMU as the owner of the policy, you may be able to take an income tax deduction for the lower of the cash value or the amount of past premiums paid.
- Deductions for Future Premiums. If EMU is the owner of the policy and premiums are still payable, your contributions to EMU to pay those premiums may also be deductible.
- Income Tax Deduction. The gift may allow you to claim an income tax deduction.
- Avoid Capital Gains. Part of the capital gain may be allocated to the interest given to EMU, thus avoiding that part of the capital gains tax.
- Life Income. Real estate that is not used as a residence may also be used to fund a charitable remainder trust providing you and/or loved ones with income for life or a term of years.
Retained Life Estate
In some cases people also choose to donate their personal residence to EMU, generally through their will or other estate planning documents. If your estate plan includes leaving your home to EMU, you may want to consider making a gift of the remainder interest during life while retaining the right to live in the home (called a “retained life estate”).
- Income Tax Deduction. The gift of the remainder may allow you to claim an income tax deduction for a gift you intended to make anyway.
- A Secure Place to Live. You may remain in the home during your lifetime. It is also possible to give another person, such as a spouse or child, a life estate in your home with the remainder going to EMU.
There are a number of important steps to follow when considering a gift of real estate.
Eastern Mennonite University and Eastern Mennonite Seminary work closely with the Mennonite Foundation to offer some of the charitable gift plans listed above. They provide excellent resources to us in the area of planned giving. (Please review the Donor Bill of Rights)
Phil Helmuth, Executive Director of Development: 540-746-2068 (direct line) or
Or call our office toll-free at 800-368-3383 at your convenience. Our development staff will be pleased to assist you.