Bequests in Your Will or Trust
The simplest way to make a planned gift to NSU is to name the University as a beneficiary in your will or in a revocable trust. In doing so, you:
Depending on the size of your estate and the amount of your charitable bequest, you will avoid estate taxes on the bequest itself and you may place the remainder of your estate in a lower tax bracket, thereby benefiting your other estate beneficiaries. If you wish, we can provide you with sample language that you can incorporate (with the advice and guidance of your attorney) into your will or trust. Please call 757-823-8323 or e-mail firstname.lastname@example.org to make a request.
- can direct that your bequest be used in any manner you choose
- may choose any portion of your property to pass to NSU upon the occurrence of a variety of events, including your spouse's or children's deaths
- retain complete control over your property until your death
- may change the amount you wish to leave NSU at any time before you pass away
- may provide for the care of others before NSU receives any part of your estate
Retirement Plan Gifts
You may designate NSU as the first or second (after your spouse) beneficiary of your retirement plan, including any individual retirement accounts you may own. This enables you to avoid the taxes imposed upon retirement accounts. These taxes can be considerable for the following reasons:
- Your heirs will have to pay income taxes on the assets held in your retirement account
- Assets held in a retirement plan, unlike other assets in your estate, will not pass to your heirs (other than your spouse) on a "stepped up" basis. This means that your heirs will likely have to pay capital gains taxes on the accumulated earnings in your retirement plan.
- Your retirement account will be subject to an estate tax and possibly a generation-skipping tax, if your heirs are your ultimate beneficiaries. Heirs other than your spouse will receive only a small fraction of your retirement plan.
However, these taxes can be avoided if the assets from your retirement plan pass to NSU. In addition, because the assets grow tax-free until they are withdrawn, the ultimate gift to NSU may be more substantial than from other deferred gifts you are considering.
Life Insurance Gifts
Life insurance may be used in a variety of ways to make a charitable gift to NSU. For policies that are paid in full (where no more premiums are due), you may transfer ownership of the policy to NSU and name NSU the beneficiary. In most cases, you will receive an income tax deduction equal to the cash surrender value of the policy.
For policies with premiums remaining to be paid, when you give the policy to NSU and name the University the beneficiary, you will receive an income tax deduction roughly equal to the cash surrender value of the policy plus a portion of your last premium payment. If you continue to make future premium payments, you can also enjoy income tax deductions for those payments.
If your employer provides group term life insurance and pays the premiums, you can name NSU the beneficiary of that policy and avoid paying taxes on the premiums you would otherwise incur. Finally, although you will not obtain a charitable tax deduction without transferring ownership to NSU, you can name the University the beneficiary of any life insurance policy you own.
Life Income Gifts
A life income gift is created when you irrevocably transfer property in exchange for which you (and/or others you designate) receive income, usually for life. While there are several different types of life income gifts, they all share the following common advantages:
- An immediate income tax deduction
- Estate tax savings
- Avoidance of all or part of the capital gains taxes otherwise due upon the sale of an appreciated asset
- An attractive income stream
- The satisfaction of having made a substantial gift to NSU. (See tax information for details on tax benefits.) NSU offers two kinds of life income gifts, charitable gift annuities and charitable remainder trusts.
Following are some examples of life income gifts:
► Charitable Gift Annuities
A gift annuity is a contract between you and NSU that guarantees you and/or other designees an income stream for life. Payments are backed by the assets of the NSU Foundation, Inc. The income stream can begin as soon as the gift is completed. However, if you don't currently need the income or want a larger income tax deduction, you may elect to defer the income until a future date.
At the end of the designated lifetimes, the remainder will be used by the University according to the donor's wishes. Because the payments are fixed, charitable gift annuities are appropriate for donors who want to make a significant gift to NSU, but are concerned with maintaining a life income stream that they can count on. They can be funded with gifts of between $25,000 and $100,000.
► Charitable Remainder Trusts
In a charitable remainder trust, you make an irrevocable transfer to a certain kind of trust. In exchange, the trust will pay you and/or other designees (beneficiaries) an income stream for life, or for a period not to exceed twenty years. At the end of the trust, the remainder will be used by the University according to the donor's wishes.
► Charitable Lead Trusts
A charitable lead trust is accomplished when you irrevocably transfer property to a trust that presently pays an income stream to NSU for a period of years or for the lifetime of named individuals, or for a combination of the two, with the remainder interest of the trust passing to any non-charitable beneficiary you choose.
Usually, the non-charitable beneficiary is a younger family member. There are different kinds of charitable lead trusts that a donor can establish to benefit NSU. Two of these trusts, the charitable lead annuity trust and the charitable lead unitrust, will provide an income tax deduction if properly set up.
All charitable lead trusts provide an estate or gift tax deduction as well. Charitable lead trusts are often used to transfer significant assets to family members at a future date with the intent of avoiding large estate or gift tax consequences.
Charitable lead trusts may also be appropriate for reducing income taxes in years that you have unusually high income that places you in a higher tax bracket, or to generate cash from immediate tax savings that can be invested in a unique opportunity.