Gifts of Lifetime Income
Gifts that return income to the donor are excellent vehicles for retirement and overall financial planning. These gifts allow you to make a significant contribution to the College and receive a number of benefits:
- Income payments for your life and/or the life of your spouse or another beneficiary you designate
- Probable elimination of capital gains tax on appreciated property
- Potential increase in income
- Potential investment diversification
- Professional investment management
- Probable reduction of estate taxes and probate costs
- Satisfaction of directing the purpose of your gift
- Fulfillment of supporting TJC during your lifetime
The gift annuity, which offers fixed payments for life, is the simplest of life income plans. It is a contract between you and the Foundation, where you agree to donate a gift in return for a fixed payment for life. Part of the distribution you receive is tax free, part is ordinary income, and - if the annuity is funded with appreciated securities - part is treated as capital gains income. Your income tax deduction is based on the amount of your gift, the ages of the beneficiaries and the income received. You may increase your after-tax income, particularly if appreciated stocks are used to fund the gift annuity. Generally, TJC enters into gift annuity contracts with a minimum value of $25,000 and annuity rates which will provide a remainder gift of at least 50 percent of the value at the end of the contract. The Foundation follows the gift annuity rates suggested by the American Council on Gift Annuities. Since additions cannot be made to a gift annuity, you may establish more than one.
Charitable Remainder Unitrusts
You may establish a unitrust, which is invested separately from the Foundation's assets and provides income that may vary from year to year. One of the best features of a unitrust is its potential to counter the effects of inflation. The unitrust is valued the first business day of every year, and a percentage of the trust is distributed regularly to you or another beneficiary. Unitrusts may be established for $100,000, and additional contributions can be made to a unitrust, usually with a minimum of $10,000.
Your income tax deduction is based on the amount of the gift, the ages of the beneficiaries, and the percentage of the trust assets received as income. Generally, the Foundation prefers not to act as trustee. We can, however, suggest financial institutions that can serve as trustee.
Charitable Remainder Annuity Trusts
You may establish an annuity trust which is also invested separately from the Foundation's assets and provides a fixed income to you for your lifetime, the lifetime of the trust's beneficiary, or a term of years not to exceed 20 years. When the trust terminates, the trust assets are distributed to the Foundation for use toward the College's highest priorities or a purpose designated by you. The annuity trust is valued at the time it is established, and at least five percent is distributed on a regular basis to you or another beneficiary.
Your income tax deduction is based on the amount of the gift, the ages of the beneficiaries, and the percentage of trust assets received as income. Generally, the more income you receive, the lower your tax deduction. Generally, the Foundation prefers not to act as trustee. We can, however, suggest financial institutions that can serve as trustee. Most banks and trust companies require a minimum of $100,000 to establish an annuity trust. Since additions cannot be made to an annuity trust, you may establish more than one.