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Types of Planned Giving |
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 - Reference room stained glass windows created by Nicola d'Ascenzo
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Charitable Rollover of IRA |
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As the result of a change in federal legislation, it is now possible for donors to make gifts to charitable organizations like the University Library in 2006 and 2007 from their Individual Retirement Accounts (IRAs) and exclude the amount of their gifts from gross income. The following page on the University of Michigan's Giving Web site provides more information regarding charitable rollovers:http://umich.plannedgifts.org/archive_2006_09.html If you are interested in rolling over an IRA to the University Library, please contact Margaret McKinley by phone: 734-936-2384 or e-mail: margiem@umich.edu.
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Gifts by Will |
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Through various types of bequests to the University Library, you may secure a charitable estate-tax deduction for the value of the gift. Best of all, you will know that your generosity will support our mission for years to come. You may prefer to state in your will or trust a sum of money, a percentage of your estate, a specific item, a work of art, or real estate that you wish to give to the University Library.Whatever form of bequest you choose, it is not subject to estate or inheritance taxes and so significantly reduces the tax burden of an estate. The value of the bequest may be deducted when the taxable estate is determined, and there is no limit to the deduction.
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Charitable Gift Annuity |
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| You make a gift to the University Library and in exchange receive a fixed annual dollar amount for life. The principal remaining at your death would then benefit any University Library program that you choose.For example, Anne Bateman, age 78, gives $10,000 in cash to the University Library in exchange for a gift annuity. She receives an income-tax deduction of $4,714 based on her age. She will then begin receiving income checks of approximately $190 each calendar quarter for the rest of her life. When she passes away, the remaining principal will benefit the University Library.
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Deferred-Payment Gift Annuity |
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| This type of gift might appeal to you if you want to support the University Library, you're 40 to 60 years old, have a high income, need to benefit now from a current tax deduction, and are interested in augmenting potential retirement income.The deferred-payment gift annuity involves the current transfer of cash or marketable securities in exchange for which the University Library agrees to pay the donor an annuity starting at a future date—usually at the donor's retirement. The gift can consist of a single transfer, a series of transfers, or periodic transfers to the plan in high-income years.
You realize an immediate charitable deduction for the gift portion of each transfer to the deferred gift-annuity plan. A portion of each annuity payment, when the payments begin, will be a tax-free return of principal over the life expectancy of the annuitant. When appreciated, long-term, capital gain securities are transferred, any reportable capital gain is spread out over the donor-annuitant's life expectancy. For example, Dr. Evelyn Garwood, 45, decides to make annual cash contributions of $10,000 to the University Library in exchange for deferred-payment gift annuities. Payments are to begin upon her retirement in 20 years and continue for the rest of her life.
The tax and financial benefits of this arrangement to Dr. Garwood are as follows:
- She will receive an annual annuity payment of $20,580 to begin when she reaches age 65 and to continue for the duration of her life.
- She will be allowed charitable deductions totaling $86,062 over 20 years, which represents more than 43 percent of her total contributions of $200,000. (The annual deduction will vary from $4,630 for the first year to $3,763 for the last year.)
- Unlike a qualified retirement plan, there are no upper or lower limits to her contributions or other restrictive requirements on the design of the plan.
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Charitable Remainder Trust |
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| You create a trust, and income from the trust goes to the beneficiaries you specify. Beneficiaries receive income for life or for a specified number of years, and at the end of the trust term, the assets of the trust will benefit the University Library.
For example, George and Mary Carlson purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. Now that they are both age 65, they would like to augment their retirement income. To do this, they transfer the stock to a charitable remainder unitrust with a six percent payout rate.
In the first year, they will receive a $6,000 payment—four times the dividends they have been receiving—and those payments will increase in time if the assets of the unitrust appreciate in value. Moreover, they avoid tax on their profit in the stock, and they receive an income-tax deduction of $28,875. In their 33 percent tax bracket, this saves them $9,529 in income taxes (33 percent of $28,875).
When the last beneficiary dies, the unitrust assets will benefit any University Library program you choose.
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