Planned Giving

Many alumni and friends of Goldey-Beacom College have chosen to support the College through a “planned gift.”  This type of planning allows the donors to make substantial gifts, realize tax benefits, and yet insure a lifetime income for themselves or their loved-ones.

Bequests, or gifts made through one’s will, have been one of the most important sources of individual support for the College.

• A specific bequest states a specific amount or asset to be given to the College at the execution of the will. (“I hereby give, devise, and bequeath to Goldey-Beacom College in Wilmington, Delaware [the sum of ___________, or a specific asset] to be used for the unrestricted needs of the College in any manner which the Board of Trustees deems appropriate.")  The donor might also designate the use of the funds (…..to be used for endowed scholarships), for example.

• A residuary bequest names Goldey-Beacom to receive all or a percentage of the remainder of the estate, after other specific bequests have been fulfilled. (“I hereby give ____ percent of the residue and remainder of my estate to Goldey-Beacom College in Wilmington, Delaware.")

• A contingent bequest stipulates that the College will receive a gift from the estate only if your beneficiaries do not survive you. In other words, assets revert to the College only if the other primary beneficiaries predecease you. (“In the event these heirs, __________, do not survive me, I give _____ dollars, or ____ percent to Goldey-Beacom College in Wilmington, Delaware.")

Depending upon the size of your estate, such a bequest can help reduce, or even eliminate, estate taxes. Remember that a bequest can be included in a new will or added to an existing will through the use of a simple codicil. It is extremely important that you consult with your attorney and tax advisor when preparing or changing a will.

Life insurance can be an extremely attractive planned gift for many donors, offering a large cash value with modest small premiums. You can choose from several options:

• Donate a fully paid-up policy, naming Goldey-Beacom irrevocable owner and beneficiary. The donor is eligible for a tax deduction equivalent to the cash value of the policy. 

• Take out a new policy with the College as irrevocable owner and beneficiary. Any sums then paid to Goldey-Beacom to pay the premiums are tax deductible.

• If you donate a policy with premiums still due, you are entitled to a tax deduction equal to the cash value of the policy and any additional gifts you make to fund the remaining premium payments.

Retirement plan assets are certainly wonderful sources for retirement income, but not always a good choice for gifts to children or grandchildren. Exposed to both estate and income taxes, heirs might receive as little as 30% of the plan after taxes. This includes assets held in accounts under 401(k) Plans, Profit Sharing Plans, Keogh Plans, IRA accounts, and 403(b) Annuity Plans.

As a result, a retirement plan is a good gift to leave to the College - as well as an easy gift to make. You can designate Goldey-Beacom as beneficiary of any remaining funds you do not use. Your estate will receive a charitable deduction for the full value of the remaining assets.

The use of split-interest trusts can be a great way to provide benefits for you, your family, and the College. With a charitable remainder trust, assets are contributed to an irrevocable trust that pays out a stream of income to you or other individuals for life or for a stated period of time. At the end of the trust term, the remaining assets are distributed to the College. Also, the trust can be created at your death with the income paid to your heirs for their lifetimes and the remainder to the College. In such situations, there may be significant tax savings when funding the trust with retirement plan assets.

There are two types of remainder trusts. A charitable remainder annuity trust (CRAT) generally pays out each year a fixed percentage (not less than 5%) of the original value of the assets contributed to the trust. This may be beneficial for someone looking for a guaranteed annual stream of income. A charitable remainder unitrust (CRUT) also pays out income during the year based on a fixed percentage of the value of the trust’s assets, which are revalued annually. Thus, if the assets in the trust appreciate, the annual payout will increase accordingly. The tax benefits of both types of remainder trusts include: (1) an up-front charitable deduction in the year the assets are contributed to the trust based on current interest rates, your age, and the amount of the annual payout; (2) diversification of investments which can produce a greater annual stream of income to you; (3) the ability to avoid capital gains if appreciated assets are used to fund the trust; and (4) lower estate taxes, since the value of the assets and all future appreciation are out of your estate.

A pooled income fund or community foundation is similar to a remainder trust. Instead of a trust, you would place assets in the fund and direct it to pay an annual annuity to you for life or for a stated period of time, and have the remainder payable to the College. This technique works well for someone who wants to contribute a more modest amount (usually under $100,000), since the start-up and annual maintenance costs are generally much less than establishing your own charitable trust.

A charitable lead trust is just the opposite of a remainder trust. In this situation, the College would receive the income from the trust each year. At the end of the trust term, the assets would be returned to the donor or another non-charitable beneficiary. Depending on how the trust is structured, there could be significant tax benefits with this arrangement. A lead trust may be advisable for someone who currently does not need the additional income, but would want to see the assets remain in the family.

Finally, a charitable gift annuity allows you to make a contribution to the College, which in return will enter into an annuity contract to pay you a stated annual amount each year for life. A charitable contribution deduction is available for the difference between the value of the contributed funds and the present value of the annuity being paid to you.

This information is provided with the understanding that the authors and the College are not rendering legal, accounting, tax or other professional advice. As with any type of planning, you should always consult with a competent tax advisor regarding the specific implications of the above gift opportunities to your personal situation.