Planned Gifts
These gifts allow the donor to receive important tax benefits
today and provide for JCSU to receive a significant gift in the
future. Here are some of the ways that you can support the
University with deferred (planned) giving. Please contact the
Office of Institutional Advancement
(704-378-1418 or klawler@jcsu.edu)
for information about making a planned gift to the University.
Gifts of Life Insurance
Life insurance policies allow donors to make significant gifts
to JCSU. By donating an existing policy that is no longer needed
for its original purpose, or by purchasing a new policy for the
purpose of making a charitable gift, the donor receives some
important tax benefits and the university receives a future
gift. The policy may name JCSU either as beneficiary or as owner
of the policy. Gifting an existing life insurance policy may
yield significant tax benefits.
For example: Let’s assume your family has grown and that
you no longer need a $50,000 policy purchased many years
ago. The policy has a cash value of about $20,000. You can
make JCSU the owner and beneficiary of the policy and
continue to pay premiums. You’ll gain an immediate tax
savings of $6,200 (based on a $20,000 deduction at an
assumed 31% tax bracket). And, you’ll gain additional tax
savings when you continue to pay premiums in future years.
The full $50,000, with no reduction for estate tax, will
come to the university to benefit future generations of
students. If you wish to not make future gifts (to offset
premium payments), you could transfer ownership of the
policy to the university, which could cash in the policy for
the cash value.
To donate a current life insurance policy, ask your
insurance company for the forms that will change the
beneficiary and ownership to JCSU. Then, send us the policy
and a letter indicating your intentions.
It is also possible to purchase a new life insurance policy
naming JCSU as beneficiary and owner. This allows for your
future premium payments (made as gifts to JCSU) to be
tax-deductible. To donate a new life insurance policy,
consult Johnson C. Smith University and your insurance
agent.
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Gifts from Retirement Funds
Making gifts from your retirement may offer significant
financial benefits. Many retirement assets accumulate on a
tax-free basis, and after retirement, when you begin drawing
your income, you will have to pay income taxes on any
disbursements. In addition, if retirement funds remain in your
estate, they are subject to significant reduction by estate and
inheritance taxes. These taxes, especially on large retirement
funds, could reduce your retirement assets by as much as 80%. By
making JCSU a beneficiary of all or part of your retirement
funds, your deferred gift will not be reduced by income or
estate taxes. Such gifts are ideal ways to maximize the impact
of your retirement funds and make a significant charitable gift.
Gifts through Bequests
A bequest is the most popular way to provide more significant
assistance to JCSU. Because a bequest is a gift made through
your will, you retain full use of your gift property during your
lifetime. There are several types of bequests, depending on your
inheritance intentions, but all may offer significant estate and
inheritance tax benefits.
Listed below are several common forms of charitable bequests
that will likely fit most individuals’ needs. Included in some
of these descriptions is sample language a donor may use when
creating the gift. Of course, donors should be encouraged to
consult their own attorney when redrafting a will document to
ensure that it is appropriate for their personal needs.
General Bequest
The most familiar type of bequest is the general bequest,
which specifies that JCSU will receive a designated sum. For
example, a donor might make a general bequest of $50,000. A
donor may prefer this arrangement because it is considered a
primary charge against the estate – which means it will
almost certainly be filled.
Sample Language: "I give, devise and bequeath to
Johnson C. Smith University $_________, the principal
and income which may be used for such purposes as the
Board of Trustees may determine."
Note: to provide a restricted bequest or a bequest that
specifies use of income only, see below.
Specific Bequest
When making a specific bequest, a donor is directing that one
particular piece of property be transferred to JCSU. This may
include a piece of real estate, the stock from one specific
company, or some other specific asset. This type of bequest is
ideal for individuals wishing to give particular stocks or real
estate or a valuable art object.
One word of caution: A specific bequest can be satisfied
only with the specific property designated in the will. If
that property has been sold or otherwise removed from the
estate, JCSU receives nothing in its place.
Percentage Bequest
This is an excellent alternative to the general bequest. The
percentage bequest states that a donor provides JCSU a
predetermined percentage of his or her estate. By making a
percentage bequest of 10%, 25%, or 50% of their estate, for
example, donors assure themselves that inflation will not reduce
the true value of their bequest intended for JCSU.
Sample Language: "I give, devise and bequeath to Johnson
C. Smith University (list percentage) of my entire estate,
the principal and income of which may be used for such
purposes as the Board of Directors may determine."
Residuary Bequest
This bequest directs that JCSU receive either everything
remaining in a donor’s estate or a designated percentage of a
donor’s remaining estate, after all necessary costs, all general
bequests, and all specific bequests are satisfied. This type of
bequest allows donors the flexibility of making several primary
bequests while still giving them the assurance that JCSU will be
a secondary beneficiary of their estate. The residuary bequest
has the drawback of uncertainty. JCSU receives only as much or
as little as is left after all primary obligations are
satisfied.
Sample Language: "All the rest, residue and remainder of
my estate, both real and personal, of any kind and
description, wherever situated and whether now owned or
hereafter acquired, including any power of appointment, I
give, devise and bequeath to Johnson C. Smith University."
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Bequests That Create an Endowment
Many individuals, particularly those providing a larger bequest,
are interested in creating an endowment fund, whereby only the
income generated by the gift is used by the university.
If donors wish to create an endowment through a bequest
in their will, they may use the following language:
"I give, devise and bequeath (define bequest as residue or
percentage of estate, sum of money, or specific asset) to
Johnson C. Smith University, to create the (insert
appropriate name) Endowment Fund. Income only from this fund
shall be used to (insert how the donor wishes the fund to be
used)."
A concern that confronts the university in the
administration of endowment gifts arises when a gift is
restricted to some particular area. With passing years and
changing circumstances, it may become unwise, unnecessary,
or impossible to use the funds for the purpose to which they
were originally intended. If donors wish to designate a
restricted gift in their estate, the university suggests
that they also include the following relief language:
"In the future, if there is no longer a need for funds as
specified or if, in the opinion of the Board of Trustees, it
is unwise to use the gift for purposes specified, the Board
of Trustees may in its discretion use the funds for the
fulfillment of other such objectives at Johnson C. Smith
University as it may designate, always keeping in mind the
objectives of the donor and keeping the name of (insert
appropriate name) associated with the distribution."
The Codicil
It isn’t difficult for donors to add a bequest to JCSU in their
will. A simple codicil (or an addendum to a will), drafted by an
attorney, is all that is typically necessary. A donor’s will
doesn’t have to be revised to accomplish this.
Contingent Bequest
This type of bequest is contingent on some event. For example, a
donor might make a primary bequest for a relative, with the
contingency that if that relative is not living at the time the
will is probated, the bequest will pass on to JCSU. The
contingent bequest is often used in the case of a husband or
wife who stipulates that if his or her spouse is not living when
the will is probated, then the bequest specified for the spouse
will pass to a contingent charitable beneficiary.
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The Testamentary Trust
Both a unitrust and an annuity trust can be set up in a donor’s
will to take effect only after the donor's death. This type of
arrangement in a will is called either a testamentary annuity
trust or a testamentary unitrust. A trust of this type provides
a donor with the opportunity to control certain property that
might be mismanaged if left outright to the beneficiary.
Furthermore, the trust can yield significant estate tax savings
for the donor’s estate.
For example, in her will, Jane created a charitable
remainder unitrust that provides lifetime income to her
daughter. Upon Jane’s death, the estate tax due on the value
of the trust’s assets is greatly reduced, since JCSU will
eventually receive a significant gift. By doing this, Jane
has provided a secure income to her daughter as well as a
generous gift to JCSU.
Life Income Gifts
These gifts provide donors or their beneficiaries with income
for a lifetime or for a period of years. At the same time, these
gifts produce important tax benefits and positively impact the
future of the university.
Gift Annuity
An annuity is a tax-sheltered investment, intended to provide
you with a steady stream of income over a number of years
(called annuity payments.) Payments can start immediately or in
the future. A charitable gift annuity will pay you and a
survivor, if desired, a fixed dollar amount when you make an
irrevocable gift to support a charitable organization. The
payment amount is determined by your age at the time of your
contribution.
Sample Charitable Fit Annuity Rates*
|
Your Age |
Annuity Rate% |
|
55 |
5.5 |
|
60 |
5.7 |
|
65 |
6.0 |
|
70 |
6.5 |
|
75 |
7.1 |
|
80 |
8.0 |
|
85 |
9.5 |
|
90+ |
11.3 |
Charitable Remainder Trusts
Charitable Lead Trust
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