LIFE INCOME PLANS AND OTHER WAYS TO GIVE TO THE FOUNDATION
- Gift Annuities & Charitable Trusts — gifts that provide income back to you.
- Endowment Fund — establish your own endowment fund.
- Estate Planning — create a legacy of education through estate planning.
- Various — give through stocks, real estate, life insurance, retirement plans, and estates.
Gift Annuities & Charitable Trusts — Gifts that Provide IncomeGift Annuities: One of the most popular forms of life income arrangement, a gift annuity offers many advantages. First, and foremost, the payout rates for gift annuities are generally quite attractive to people in their 70s, 80s and 90s. The rates typically range from 5-9%. If a person, or couple, is currently experiencing a low return on their CDs, money market accounts, treasury notes, or bond funds, a gift annuity can be a nice alternative. The payout rates are determined by a person's age, and once established are fixed for life. Second, the donor receives a generous income tax deduction for the year in which they create a gift annuity. Often the tax deduction is 20-50% of the amount that they placed into the annuity. And finally, depending upon how the gift annuity is funded, the donor can enjoy a significant portion of the income they receive from a gift annuity on a tax-free basis.
There are many forms of gift annuities. Some offer an immediate payout option, while others allow the donor to fund the agreement and get an income tax deduction now, but delay the beginning of payments until some point in the future of their choosing. Call the Foundation if you are interested to learn more about gift annuities. A confidential illustration can be prepared specifically for you, which will reveal what your payout rate would be, how large your income tax deduction amount would be and what portion of your payments would be tax-free. There is no cost or obligation to inquire.
Charitable Trusts: Charitable Remainder Trusts (CRTs) can be one of the most powerful planning tools available as people do retirement and estate planning. CRTs afford the donor potentially five favorable tax outcomes by virtue of one financial transaction. They are: 1) capital gain tax avoidance 2) income tax deduction, 3) tax-free compounding 4) income payments taxed favorably, and 5) estate tax elimination (for those people with larger estates).
- Capital Gain Tax Avoidance allows people to place an asset(s) in a CRT and avoid paying initial capital gain tax in the process. For example, if you paid $100,000 for some property that is now worth $500,000 you can sell the property through a CRT without having to report the $400,000 of capital gain as income.
- An Income Tax Deduction is available to those who create CRTs. People in Washington are able to receive a significant federal income tax deduction based upon a portion of the market value of the asset they place in a CRT.
- Tax-Free Compounding occurs on the asset(s) that is placed in a CRT. For example, if you place an appreciated piece of real estate in a CRT and then sell it, the proceeds are typically then invested in stocks and bonds. Any investment growth inside the CRT will occur tax-free for as long as the trust is in existence.
- Income Payments Taxed Favorably occurs as people receive their payments from a CRT. Often, if invested carefully, the person(s) receiving income from a CRT may receive portions of that income taxed at long-term capital gain rates. For many people, the long-term capital gain of 15% is less than their ordinary income tax bracket.
- Estate Tax Elimination can be accomplished for those with large estates. Effectively, the value of the asset placed in a CRT comes out of the donor's estate, thereby lowering the donor's taxable estate. As an example, if a couple has an estate valued at $4,500,000, and they place a $500,000 asset in a CRT, the taxable value of their estate would be lowered to $4,000,000.
Endowment Fund — Creating Your Own EndowmentEstablishing a permanent endowment in your name or the name of a loved one is a wonderful way to create a legacy, as well as provide ongoing funds to Centralia College. With this type of fund, a percentage of the earned income is used to carry out the purpose of the endowment while the principal remains intact. Under the current Foundation policies a contribution or bequest of a minimum of $14,000 will establish a named endowment. To learn more about setting up an endowment and for information on the various programs and capital projects that are available for naming opportunities, please contact the Foundation office at (360) 736-9391, ext. 290 or email firstname.lastname@example.org.
Estate Planning — Creating a Legacy of EducationEvery once and a while you may stop to consider the impact your life has on the people around you. Many people can look at their family and friends-knowing they have had a positive influence. Still they yearn to do something more, something deeper for mankind, something positive that will survive the challenge of time. Often our cash resources are limited. We would like to give to more money to our favorite charitable causes, but there simply aren't enough resources available. What if you could make a lasting and permanent gift...one that was bigger than you ever dreamed possible? And what if you could do it in a way that honored and protected your loved ones inheritance at the same time?
If you would like to create this kind of legacy, the Legacy Society has been established by the Foundation just for you! This allows the Foundation to thank a very special group of people: those who have remembered to include the Foundation in their future giving and estate plans.
How to become a member of the Legacy Society: Becoming a member is simple! You can either call or write the Foundation to tell them you have included the Foundation as a beneficiary in your estate planning, or you can ask for a copy of the Legacy Society brochure to get more information. Legacy Society members will be honored on a special plaque that hangs in a prominent place on the Centralia College campus. Additionally you will receive a beautifully framed certificate, and be invited as a special guest to special Foundation events. For more information about including the Foundation in your future plans, you can also call the Foundation office at (360) 736-9391, ext. 290 or email the Foundation at email@example.com.
Need more information about estate planning? If estate planning is something you are thinking about for the first time, or if you need to update an older estate plan, we have resource material, and people, available to help you. To get you started, the Foundation has a "Will and Trust Planning Guide," and an "Estate Inventory Form" that are free - just contact our office. We have staff members who are well-versed in the technical aspects of business transition, retirement, and estate planning. While the Foundation cannot serve as your legal counsel, our staff are trained to help in areas such as:
- how to sell your business while minimizing capital gain tax
- protect the way in which your loved ones receive their inheritance
- minimize taxation on retirement plans
- reduce or eliminate estates tax
- scholarships for young people
- capital expansion
- computer equipment
- where need is greatest
- considering becoming a member of the Legacy Society
- have already placed the Foundation as a beneficiary in your estate plan
- would like copies of the Will and Trust Planning Guide and Estate Inventory Form
- would like someone to visit with you about estate planning
Various Ways To GiveStocks: If you have publicly traded stock that has appreciated in value, it is most advantageous to give the stock rather than cash. Why? Because any capital gain tax that you would have incurred if you sold the stock will be avoided when you give it to the Foundation instead. Then, if you happen to like that particular stock, you can then use your available cash to repurchase the stock at a new, higher cost basis.
Real Estate: While cash, CDs, and marketable securities are thought of most often when making a gift to a charitable organization, real estate is sometimes the best gift of all. Many people reach a stage in life where they simply don't want the management responsibility that accompanies property ownership. For those who have rental apartments or commercial buildings, not only can they avoid capital gain tax, but they can avoid depreciation recapture tax as well. For those people with farms or vacation homes, life-income arrangements such as CRTs or Gift Annuities can be equally rewarding. Call the Foundation and a representative will be happy to discuss a gift of real estate with you.
Life Insurance: The Foundation is able to receive life insurance gifts in two ways. First, people often have what is called a "paid up" policy. In other words, they have owned the life insurance for so long, that cash value has grown inside the contract. Sometimes the cash is significant enough that the earnings on that cash are enough to pay the premiums. In those instances, the life insurance is deemed to be "paid up." So, whether someone has a "paid up" policy or has a policy with significant cash surrender value, the Foundation is pleased to receive these kinds of life insurance gifts. (NOTE: The Foundation does not participate in start up life insurance programs, in any form, where the goal is to have donors make donations with the expectation that the Foundation will use those proceeds to pay insurance premiums.)
Retirement Plans: Recently Congress changed the rules on retirement plans. Today, the payout rate requirement after age 70.5 is much lower than they used to be. Consequently, as people get into their 80s and 90s its more likely that their IRA, KEOGH, or 401k balances will remain higher. That is good news for most older Americans! However, there is a looming and often large tax on retirement plans that people often don't consider while doing their estate planning. Here's how it works:
Congress allows each of us to put money into a retirement account during our working years tax-free. In other words, we don't have to pay income tax on the amount of money we place in IRAs, KEOGHs, or 401ks. Additionally, our retirement accounts get to compound in value tax-free as well in order that they can grow as quickly as possible to support us during our retirement years. However, the IRS doesn't forget that those very same retirement plans have never been subject to tax! So, if a person passes away while holding the retirement plan in their estate, income tax to your heirs AND possibly estate taxes will be due. To avoid this scenario, it's often advisable for people simply to name their favorite charitable organization(s) as the remainder beneficiary of their retirement plan. This can be easily done by calling the retirement plan administrator and filling out a new beneficiary designation form. Charitable organizations are not subject to estate or income tax, so the full value of the retirement plan can become a gift.
Estates: Often referred to as "bequests" a person or couple can name the Foundation as a beneficiary in their estate documents, regardless whether they use a will or living trust. This is one of the most meaningful ways a charitable organization can be supported by those who have been touched in some way by the work the College is doing. And, it's easy to do! You can call our offices at (360) 736-9391, ext. 290 and our staff will be happy to provide language you can give your attorney as you update, or complete, your estate plan.