Planned giving options let donors leave charitable gifts regardless of economy
Release Date: September 4, 2009
PLAINVIEW – With the uncertainty surrounding the current economy, donors to charitable organizations like Wayland Baptist University may be reluctant to get rid of any liquid assets. If retirement plans or invested funds tanked somewhat with the market, that only adds to the hesitation.
But that doesn't mean you have to write off the university from any of your generosity. In fact, now is a good time to think of Wayland's future while you're also thinking of your own.
Planned giving is an ideal way to do just that, making arrangements to leave a gift to the university years down the road and leaving a legacy to support Christian higher education without putting yourself in financial straits right now.
Plus, as Martha Cross puts it, planning ahead is a good move no matter how big your estate may be or what you feel called to donate.
"If you don't make plans, someone else will decide what happens to your money and your things (upon your death)," said Cross, who serves as Wayland's Director of Major Gifts. "I would much rather choose those things than let someone who doesn't really know my heart do it."
Though leaving the university in your will – whether you leave the entire estate, a percentage or certain assets – is the first thing associated with planned gifts, Cross said there are actually several options for those wanting to make a legacy gift in the future.
Below is a quick glance at the various options available to donors. Though not all the details are provided, the development officers at Wayland will be glad to visit with you individually about your situation and which option might be best for you in terms of financial security and tax benefits.
- Provision by Will: The easiest of the options, leaving parts or all of your estate to Wayland is as simple as adding a statement to your will to that effect. Make sure you designate an exact dollar figure or percentage and be specific if willing property or other assets to the university. Gifts may be designated to a special project or given for the general use of the school.
- Charitable Remainder Annuity Trust: This involves donating assets that provide income to the university but retaining regular income payments for the donor for the life of the trust. Once the trust is terminated, Wayland retains full rights to the asset. This typically results in a large savings of capital gains taxes for stocks and other assets whose value has appreciated significantly over the years.
- Charitable Remainder Unitrust: Similar to the annuity trust, the unitrust bases the income payments on the net fair market value of the asset as it is determined annually. The donor receives an initial tax deduction on the gift and possible federal estate tax savings down the road.
- Gift Annuity Agreement: In this scenario, a gift is made to the university and regular payments made to the donor are based on their life expectancy. The tax savings vary as the donor ages and payments are partially tax-free for a period of time. The university may use the gift excluding the amount necessary to make annuity payments.
- Retirement Plans: The donor simply names the university as partial or full beneficiary to a retirement plan and at their death, the plan is transferred to Wayland. The donor can use what they need of the retirement funds during their lifetime.
- Charitable Lead Trust: This plan involves regular payments to a charity from a trust developed by a donor, and the donor pays no taxes on that income since it is transferred to the university. The tax benefit comes in the form of gift or estate tax deductions, and the trust can be left to the donor’s heirs.
- Revocable Living Trust: The donor establishes a trust with regular payments made to them, another person or the university, with the option that all or part of the benefits may be redirected during the donor's lifetime. If the assets pass to the charity upon the donor's death, the delay and costs of probate are avoided and the gift is free from the possible estate taxes incurred.
Planned gifts require donors to evaluate their assets, lifetime expense needs and determine which scenario would best work for them and allow them to make charitable contributions to the university. Cross said that planning ahead is also helpful to the university in the future.
"It helps the university to know there are plans in place for its future security," she said. "If they've included us, it shows they believe in us and our future. That makes me want to work harder and maintain high standards for donors who are investing in the future of this university."
That idea of sustainability was one that prompted longtime Wayland employees and alums Joe and Freda Provence to include the university in their will and as beneficiary for an insurance policy.
“We have no children except our hundreds of Wayland students that we’ve loved over the years,” said Joe, emeritus director of alumni services and a 1966 graduate. “This was a way we felt like we could benefit our 'children,' by leaving the vast bulk of our estate to the school.”
While the Provences are regular supporters of the school with scholarship funds, memorials and gifts to specific projects and student trips, their planned gift shows their love for the university and desire to keep their giving going after they are gone.
“It's really the gift that keeps on giving,” said Provence.
For more information on planned gifts, contact Cross at (806) 291-3427.