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A charitable gift annuity is one of the favorite
methods of gifting while retaining an income stream from the
asset. It is a contractual arrangement between you and BSC
Foundation. In exchange for your contribution of cash,
securities, or other appreciated assets you will receive:
- An excellent rate of return that is guaranteed and fixed for
one or two lives,
- Payments that are partially tax-free for your lifetime,
- A charitable deduction for income tax purposes,
- Favorable treatment of capital gain assets (highly
appreciated assets will cause some reduction in the tax-free
portion).
The process is as easy as purchasing a certificate
of deposit at your local financial institution. However, you do
not need to worry about fluctuating interest rates or renewing
the certificate. The annuity rate is based on the age of the
income beneficiary(ies) at the time the gift annuity is
established. After it is established, the rate does not change.
The following chart provides sample gift annuity rates.
| One-Life |
|
Two-Lives |
|
| Age |
Rate of Return |
Ages |
Rate of Return |
| 65 |
7.0% |
65/65 |
6.6% |
| 70 |
7.5% |
70/70 |
6.8% |
| 75 |
8.2% |
75/75 |
7.3% |
| 80 |
9.2% |
75/80 |
7.5% |
| 85 |
10.5% |
80/80 |
8.0% |
This gift annuity arrangement has many of the same
advantages of an immediate charitable gift annuity. It can be
used as a retirement planning or income deferral tool. Instead of
an immediate payout, the payments start at a future date. The
result is a higher charitable deduction and a higher rate of
annuity payment.
If you own stock that is paying you low dividends,
maybe 1% or 2%, a life income trust may be an appropriate gift.
You could transfer the stock to us and establish a charitable
trust that would provide you with 5% or greater annual return.
This income would be paid to you and/or loved ones for life,
after which the assets would be distributed outright to us.
Through such an agreement, you would be increasing your income
and making meaningful (and tax deductible) contribution to us at
the same time.
Example: Mrs. Jones, age 70, purchased some stock
may years ago for $10,000 and now that stock is worth $100,000.
She receives only $2,000 per year in dividends, or a 2% yield. By
transferring the stock to a charitable trust and specifying that
she wanted a 6% return for life she could:
- Triple her annual income (from $2,000 to $6,000);
- Avoid the capital gains tax she would otherwise incur on the
sale of the stock; and,
- Be entitled to a charitable deduction of approximately
$55,000. (The amount of the deduction depends on the age of the
donor, the rate of returns specified in the trust, the size of
the gift, and other factors.)
- Since the trust assets eventually pass to us, the asset would
not be subject to estate taxes.
Charitable lead trusts are essentially the reverse
of the life income gifts described above. The income from the
trust is first paid to us; the charity's interest leads the way
(hence the name of the trust). Under this arrangement, you
transfer assets to a trustee who makes payments to us for a
specified number of years, after which the assets are transferred
to your heirs. The charitable lead trust allows you to pass
assets on to your children and grandchildren either completely
free or substantially free of all estate and gift taxes. It can
make good sense for anyone in the 50% estate and gift tax
bracket.
We can be named as a beneficiary in your will in
any one of a number of simple ways. An outright gift, either a
designated dollar amount or percentage of your estate could be
specified. We could also be named as a remainder beneficiary to
receive funds only after specific sums have been paid to
individual beneficiaries. It may be helpful to know that you can
easily add us to your will through an amendment to your will
called a codicil; thus your entire will does not have to be
redrafted.
Not all of the available methods of giving can be
included in this primer. Please call Gordon Binek, Vice
President of College Advancement & Federal Relations, at 701-224-5697, or toll-free
1-800-272-2586 or email Gordon.Binek@bsc.nodak.edu,
if you have any questions about a planned gift to Bismarck State
College Foundation.
To contact us:
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