Leave Your Legacy at Peace College
There are numerous ways you can make a gift to support the people and programs of Peace College. Although outright gifts - like those made to The Loyalty Fund - provide vital resources for the college today, deferred gifts help ensure Peace's future. Giving through estate plans or life income gifts may be particularly suitable for individuals who would like to provide significant support for Peace College but need income from their assets during their lifetime. Some options include:
This information contained herein is not intended as legal advice. For legal advice please consult an attorney. To learn more about Planned Giving or to make a gift, contact: Karen Nolan, Director of Gift Planning, at 919.508.2042 or via e-mail at knolan@peace.edu.
I. Will or Living Trust Bequests
A bequest is the easiest and most common form of planned giving. You may make provisions for Peace in your will or living trust by designating either a specific dollar amount or a percentage of your estate. By so doing, you
- May change the amount and nature of your gift in support of Peace anytime prior to your death
- Can direct how your bequest is to be used
- Can retain control over the assets for the duration of your life
- Can delay the gift until the occurrence of a specific event such as the death of your spouse or children
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May provide for the care of your loved ones before Peace receives any portion of your estate.
Bequests under your will or living trust provide estate tax relief to your estate and may enable you to provide larger benefits to your loved ones since charitable gifts are not taxable.
Please consider sharing your plans to benefit Peace College via your will or living trust with us. Doing so allows us the opportunity to assist you in designating your gift properly and to express our appreciation for your support of the College and qualifies you for membership in the Heritage Society.
If you are planning to make a bequest to Peace, the following language may be helpful to you and your legal advisor. Please download the Sample Bequest Language here.
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II. Gifts of Life Insurance
Life insurance may be used in several ways to make a gift in support of Peace College by assigning the ownership to Peace. The charitable deduction for gifts of life insurance depends on the type of policy, the status of the premiums and ownership of the policy.
Naming Peace as owner and the irrevocable beneficiary of the policy will generate an income tax deduction for the donor. Paid-up policies will generally result in an income tax deduction equal to the cash surrender value of the policy.
For policies with premiums remaining to be paid, the deduction is approximately equal to the cash surrender value plus a portion of the last premium payment. If you continue to make future premium payments, you can also receive an income tax deduction for those.
You may also designate Peace College as the beneficiary, or contingent beneficiary, of your group term life insurance through your employer. This method of giving will not generate a current income tax deduction, but it will remove the value of the insurance from your estate. Your human resources division can assist you with making such a designation on your group term policy.
If you prefer to retain ownership of the policy, you can name Peace as the beneficiary and the value of the policy will not be taxable in your estate. In this case, there will not be any current income tax deduction.
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III. Life Income Gifts
Life income gifts involve the irrevocable transfer of assets in exchange for income for life (or a term of years in some cases) for one or more beneficiaries. Only after the death of the last beneficiary are the remaining proceeds used for the purpose the donor designated. Peace College offers two types of charitable remainder trusts (the annuity trust and the unitrust) and two types of charitable gift annuities (one with payments that start now and a deferred option with payments starting in the future). All of these gifts share several common characteristics:
* An immediate income tax charitable deduction;* Estate tax savings;* Income for life or a term of years;* Relief or total avoidance of capital gains tax on the transfer;* The satisfaction of making a significant gift in support of whatever areas you choose at Peace College.
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A. Charitable Gift Annuity
The easiest and simplest form of a life income gift is the charitable gift annuity. This is a simple one and a half page contract between the donor and Peace College, whereby Peace guarantees to pay the donor, the donor and his or her spouse, or another beneficiary, a set sum annually for life. The payments remain the same over the lifetimes of the income beneficiaries, and often a portion of the income received is tax exempt. The interest rate paid depends on the ages of the income beneficiaries and whether the payments are to start at once or be deferred to some point in the future. Charitable gift annuities can be funded with cash or publicly traded securities. Additions are not permitted to a charitable gift annuity or a deferred gift annuity; however, a new contract can be drawn at any time.
B. Deferred Gift Annuity
Deferred gift annuities can be an excellent retirement income or IRA substitute. Since the payments are deferred for at least one year, the interest rate paid will be substantially higher than for an immediate payment annuity and the charitable deduction will be larger as well. In certain circumstances, real estate can be used to fund a deferred charitable gift annuity.
Requirements to establish a charitable gift annuity or deferred gift annuity:
* Minimum of $10,000 * Minimum age of 55 for a standard annuity. Minimum age for a deferred annuity of 40 with a 15 year deferral * One or two lives only
C. Charitable Remainder Trusts
This type of irrevocable gift can provide significant future support for Peace College while potentially increasing the income of the beneficiary or beneficiaries. Payments will be made to the beneficiaries for either their lifetimes or for a term of years (20 is the maximum allowed by law). The donor directs how the proceeds will be used. Only at the conclusion of the trust is Peace able to use the gift for the intended purpose. There are two types of charitable remainder trusts--the unitrust trust and the annuity trust.
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1. The Unitrust
If your goal is to provide an income stream to yourself, your spouse or other beneficiaries and provide a hedge against inflation, then you should consider a charitable remainder unitrust . This type of charitable trust allows you to make additions to the trust principal at any time, and pays income based on a fixed percentage of the trust assets as valued each year. As the value of the trust increases, you share in that appreciation by receiving a larger income distribution.
This type of trust can be funded with cash, securities, real estate or other personal property. The donor avoids capital gains tax on the transfer to the trust thereby leaving the entire value of the gift available to be reinvested to benefit the named life beneficiary. The assets placed in the trust will not be taxable in the donor's estate as long as the beneficiaries are limited to the donor or the donor and his or her spouse.
Requirements to establish a charitable remainder trust:
* Minimum amount of $50,000 * One or two lives only unless a term-of-years trust is used * Beneficiary 50 years of age or older unless a term-of-years trust
2. The Annuity Trust
If you would prefer to receive constant payments from your life income gift, you might consider a charitable remainder annuity trust. Like a charitable remainder unitrust, the annuity trust provides the donor with capital gains tax avoidance, immediate income tax deduction and the ability to designate how the funds will ultimately be used by Peace. However, unlike the unitrust, the payment from an annuity trust is based on a percentage of the market value of the trust assets at the time it is funded and the payment amount never changes. Additions to the annuity trust are not allowed.
Requirements to establish a charitable remainder trust:
* Minimum amount of $100,000 * One or two lives only unless a term-of-years trust is used * Beneficiary 50 years of age or older unless a term-of-years trust
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IV. Testamentary Life Income Options
You may establish a charitable remainder trust, a charitable lead trust or a charitable gift annuity through your will. Because it does not come into existence until after your death, it will not provide any income tax savings during your lifetime. However, it will provide income for a spouse or other loved one for his or her lifetime and will reduce your exposure to estate taxes.
V. Charitable Lead Trust
The charitable lead trust is essentially the reverse of a charitable remainder trust. Rather than receiving the trust's remainder value, Peace will receive the trust's income for a specified period of time. At the conclusion of the trust, the property either reverts to the donor or to a non-charitable beneficiary designated by the donor. Established during the donor's lifetime or through a will, charitable lead trusts are best for donors who can forego the income generated by the property for the trust's period of existence. The tax benefits for this type of a trust are complicated but can be highly beneficial depending on the tax situation of the donor and his/her family.
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VI. Retained Life Estate
A provision of the tax law allows you to give your personal residence, or farm, to Peace College and to retain for yourself and your spouse or other beneficiary the right to continue to live there for life. During your lifetimes, you retain the full use of the property and continue to pay all expenses related to the property. At the death of the survivor, the property passes to Peace.
In addition, your vacation or second home qualifies for this treatment as long as it is used as a personal residence and not a rental property. The immediate charitable deduction allowed for this future gift is the present value of our right to receive the property at some later time. This present value, and the resulting charitable deduction, is determined, primarily, by the age of the life tenants. If the lifetime enjoyment of the property is limited to the donor and his/her spouse, the property will not be taxed in either estate.
VII. Giving with Retirement Plans
Frequently, people reach retirement age with significant wealth accumulation in retirement plan accounts. Unfortunately, assets in these types of plans are included in the owner's taxable estate at death and can be subject to as much as 70% combined estate and income taxes.
Rather than see such a large percentage of your remaining retirement assets eaten up by taxes, you might consider directing that part or all of these excess retirement assets be used to make charitable gifts. While the value of these accounts is still included in your taxable estate, your estate will receive a full charitable deduction for all gifts designated to charity.
Please contact Karen Nolan, Regional Director and Director of Gift Planning (919) 508-2042, (800) PEACE-47, or knolan@peace.edu, if you have any questions or need additional information.
This information is not intended as legal advice. For legal advice please consult an attorney.
To learn more about Planned Giving or to make a gift, contact: Karen Nolan, Director of Gift Planning, at 919.508.2042 or via e-mail at knolan@peace.edu.
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