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Deferred Planned Gifts

Deferred planned gifts, or planned gifts that culminate at a future date, have the ability to mitigate fears of the donor “running out of money” late in life, while also potentially mitigating the effects of estate and ordinary income tax that would otherwise be paid by the donor’s estate or family. Common strategies include:

  1. Giving through a will or trust
  2. Giving through life insurance

Giving Through a Will or Trust  

Structuring a planned gift to name Greenville College in your will or revocable living trust can allow for a benefit to your family and a significant contribution to the ministry of the College. This strategy will also ensure that the donor maintains control over the assets during their lifetime, because the terms of the gift can be modified as needed if the donor’s charitable ambitions should change. As part of your estate plan, remember which accounts are most efficient to leave to family and which are best suited to be left directly to a nonprofit. We are available to to discuss the difference this can make. For the most part, your real estate and taxable investment accounts will receive a step-up in cost basis at the account owners’ passing. Therefore, these assets will be the most efficient to give to individuals as they will pass without capital gains or ordinary income tax (they may, however be subject to an estate tax if the estate is worth greater than $5m for 2012). In contrast, retirement accounts and annuities are the most efficient assets to leave to a charity. Because a charity usually does not have to pay taxes, the ordinary income tax on an IRA, or growth of an asset through capital gains, would not be realized by the charity in most circumstances. Without this level of planning, a portion of the estate would be consumed to pay the taxes owed by these assets.

Giving Through Life Insurance

Giving through life insurance has the potential to greatly multiply the impact of a series of annual gifts, culminating in a large benefit to the College. If you have an existing policy, you can designate the College as a beneficiary. Also, a current tax deduction may be available if you transfer the ownership of the policy to Greenville College. If you are interested in leaving the College with a significant benefit, consider the following: A donor(s) takes out a whole life (or second-to-die) policy that is owned by the institution. The donor(s) then “gives” the annual premium amount to the institution (receiving a tax deduction for the gift). The College then pays the premium of the life insurance policy. At the death of the individual (or spouse, in a second-to-die policy) the institution receives the life insurance proceeds. Depending on the donor’s age and health, this has proven to be a powerful way to leave a lasting legacy to the nonprofit of your choice.


 

 

Disclaimer: This content is for educational and informational purposes only and should not be considered legal, tax, accounting or other professional advice. We encourage you to consult with your professional advisors regarding any gift you are considering.