As an Auburn Montgomery benefactor, your giving can achieve personal goals, enhance your financial security and help shape the University’s future. Planned Giving is a technique of including charitable giving in your total financial estate plan. Download Planned Giving Brochure PDF or view the interactive book.
Many Auburn Montgomery alumni and friends who wish to help shape the University’s future have chosen a planned gift to perpetuate their loyal support beyond their lifetime, while realizing substantial benefits for themselves today. These benefits can include significant savings on income and estate taxes, lifetime income streams and in some instances a greater amount of wealth passed on to family members with less federal estate tax.
Aside from the financial benefits one might receive from making a planned gift to Auburn University Foundation, there is an intrinsic value in making such a gift. Planned gifts help maintain and advance the quality of education at Auburn Montgomery. Through a planned gift, you can create an endowed scholarship, a fund for excellence or an endowed professorship. The impact of these gifts reaches far beyond campus buildings and boundaries. Planned gifts to Auburn Montgomery ultimately benefit individuals who study, learn, teach, grow and give.
A will is a statement about what matters most in your life. By making a will, you can ensure that your intentions are clearly expressed, and that they will be followed by those administering your estate.
After providing for family, friends and others, many alumni and friends include a meaningful bequest to Auburn Montgomery in their will to continue their lifetime support. Including the Auburn University Foundation as a beneficiary of your will is one of the easiest ways to provide for future generations of Auburn Montgomery students and faculty.
To include the Auburn University Foundation in your will simply inform your lawyer.
Gifts of Life Insurance
A gift of a life insurance policy or its proceeds is another easy way to make a planned gift to the Auburn University Foundation (AUF). This arrangement allows you to make a significant gift to AUF and use the tax savings to purchase a life insurance policy.
Listed below are several ways you can provide for Auburn Montgomery through a life insurance gift:
- Naming the AUF as a beneficiary or partial beneficiary of any policy on your life, including policies through your employment. Although there are no lifetime tax benefits in doing so, you may designate the AUF as a beneficiary or partial beneficiary of insurance on your life, including policies through your employment. Most designations can be completed simply and conveniently with the help of your insurance company or employee benefits coordinator. If you have excess group term coverage, you may want to name the AUF as a contingent beneficiary of an existing policy.
- Naming the AUF as the owner and beneficiary of a paid-up policy or an existing paid-up policy that is no longer needed by you or your family. The AUF must become the owner of any policy if you wish to receive an income tax charitable deduction. A donor of a life insurance policy cannot retain any rights (such as the right to change the beneficiary) in the policy of the donor chooses to take the income tax charitable deduction for such gifts.
- Naming the AUF as the owner and beneficiary of a policy that is not fully paid-up. If the donor continues to pay the annual premiums, the amount of the premiums will be tax deductible each year. The AUF does not continue to pay premiums on non-paid-up policies owned by the Foundation unless the donor provides gifts for the premium amount.
Gifts of Retirement Plan Assets
Retirement plans, such as an IRA or a 401(k), can be ideal vehicles to make a planned gift to Auburn Montgomery. By naming the AUF as the beneficiary of such a plan, significant estate and income taxes can be avoided since income taxes are usually due on undistributed funds in such plans, even after a person’s death. If a charitable remainder trust is established as beneficiary of the retirement plan of a donor, an income stream can be provided to a loved one after the donor’s death and most income and estate taxes on the undistributed plan assets can still be avoided.
Gifts of Remainder Interest
You may give the Auburn University Foundation your personal residence or farm and retain the right to occupy the residence or operate the farm for the rest of your life. This provides a current income-tax charitable deduction for the present value of the remainder interest.
The term "farm" includes any land used by the donor for the production of agricultural products for the sustenance of livestock. The term "personal residence" is defined in the tax code regulations to include any property used by the donor as a personal residence even though it might not be the primary residence. A single family dwelling, condominium, or vacation home qualifies as a personal residence if used each year by the donor.
Auburn Montgomery and the Auburn University Foundation are not engaged in rendering legal or tax advice. For advice and assistance in specific cases, the services of an attorney or other professional advisor should be obtained. The purpose of this publication is to provide accurate and authoritative information of a general character only. Watch for tax revisions. State laws govern wills, trusts and charitable gifts made in a contractual agreement. Advice from legal counsel should be sought when considering these types of gifts.
Life Income Plans
Many alumni and friends wish to make a substantial deductible gift during their lifetime, but still want to receive an income stream from the cash, securities or property donated. This can be accomplished through several life income plan gifts.
Charitable Remainder Trust
A Charitable Remainder Trust is an instrument which provides an income stream for the life of the donor and/or a designated income beneficiary. At the termination of the trust, the principal of the trust is distributed to the AUF.
There are two types of charitable remainder trusts: unitrusts and annuity trusts.
- A Charitable Remainder Unitrust pays a fixed percentage (at least 5%) of the net fair market value of the trust assets as valued annually. Because the value of the assets can be expected to change from year to year, the unitrust payment will vary in amount each year.
- Annuity Trust: A Charitable Remainder Annuity Trust pays a fixed amount annually, which must be at least 5% of the fair market value of assets initially contributed to the trust. This annual amount remains constant, and no additional gifts may be made to the annuity trust after its creation.
Charitable Lead Trust
The charitable lead trust is essentially the opposite of the charitable remainder trust. It pays income to the AUF for a period of years and later returns the principal of the trust to the donor or other loved ones. The lead trust can be one of the few ways to reduce taxes that would otherwise be due on assets left to succeeding generations. The charitable lead trust may freeze for estate and gift tax purposes the value of assets contributed to it as of the date of the trust’s establishment and distribute the assets (with any appreciation over the terms of the trust) to children or grandchildren at the end of the term.
Charitable Gift Annuities
Current Gift Annuity: The Charitable Gift Annuity requires only a basic contract between a donor and the Auburn University Foundation, whereby a donor irrevocably transfers assets to the Foundation. In return, the Foundation agrees to pay the designated annuitant(s) fixed payments for life, at rates approved by the American Council on Gift Annuities. The transfer is party charitable gift (which often qualifies for a substantial current income tax deduction) and part purchase of an annuity.
The payments are backed by all of the Foundation’s assets. The dollar amount to be paid annually to the annuitant depends upon the age of the annuitant at the time of the gift and this amount remains constant for life. The older the annuitant, the higher the rate of return used to determine the dollar amount to be paid.
Deferred Gift Annuity: Instead of securing an immediate payment under a gift annuity, you can have it deferred until a later date, such as your retirement. You make the contribution now, securing a current income tax charitable deduction, and we agree to pay you a guaranteed life income starting any date you select. This is especially advantageous if your tax bracket is higher now than it will be later or if you currently do not need the annuity income.
College Gift Annuity: Various IRS private letter rulings have outlines of deferred gift annuity agreements in which a donor exchanges lifetime payments for a lump-sum payment or for larger payments over a shorter time period. Commuting payments from a deferred gift annuity is especially popular for donors who wish to use the deferred gift annuity to help fund college tuition.