There's a gift arrangement for everyone. For many, a gift through one's estate is the best way to give. For example, naming a charity as beneficiary of your retirement plan can be a tax efficient way to make a bequest.
For others, a life income gift can help increase income and save on taxes, making charitable giving an attractive strategy.
If you are heavily invested in one stock or sector, planned giving can help. You can make a gift of that investment to a Harvard life income arrangement, eliminate or reduce the capital gains tax, take an income tax deduction for a portion of your gift, and benefit Harvard and possibly other charities. By doing so, you diversify your source of income in both a tax savvy and charitable way.
Qualified retirement plan assets are some of the best assets to leave to charity. Your estate avoids all income and transfer taxes, putting 100 percent of the assets to philanthropic use.
To make this gift, you can simply notify your plan's administrator of your wish
to change the beneficiary. A "change of beneficiary" form will be required.
Should you designate that your retirement plan come directly to Harvard at
your death, your spouse will need to sign consent to the designation. A consent
is not necessary for an IRA unless you reside in a community property state.
If your spouse and children are currently the beneficiaries of your retirement
plan, you can continue to keep them as beneficiaries, and also include Harvard
as the beneficiary of a portion of the plan. Upon your death, the plan administrator
can "cash
out"
Harvard's
share of the account without affecting your family’s portion of the account,
so that Harvard, and your heirs, benefit from your retirement savings.
Click here to view sample
beneficiary designation for spouse and charity.
Stocks, bonds, cash, and tangible personal property such as works of art and real estate also make terrific bequest assets. You can either leave them directly to charity, or use them to fund a life income arrangement for one or more heirs.
Click here for sample language for a bequest to Harvard.
Many of Harvard's gift arrangements allow you to allocate up to 50 percent to non-Harvard charities. The Charitable Remainder Trust and the Charitable Lead Trust all allow you to do so, while you and your other charities of choice benefit from Harvard Management Company's investment and administrative services.
See how one Harvard donor has done this:
John Reidy AB '61, MBA '63
There are various options: a term trust, pooled income fund, or gift annuity.
You, as the donor, reap the benefit of an income tax charitable deduction, provide income to your loved one, minimize your taxable estate, and make a great gift to Harvard.
The Charitable Gift Annuity can provide you and/or another income beneficiary with a fixed and guaranteed income for life. Your annuity rate is contingent on your age -- the older you are, the higher your annuity rate. The assets of Harvard University back your annuity payments.
If you make a planned gift, you will receive an income tax charitable deduction for a portion of the gift. You can use your deduction up to 50 percent of your adjusted gross income (AGI) for gifts of cash, or 30 percent of your AGI for gifts of appreciated assets, such as stock and real estate. You can use your deduction in the year you make your gift and carry forward any unused portion for up to five additional tax years.
There is also an opportunity to receive some tax-free income from one of our life income arrangements.
Yes, you can establish a "retained life estate" with Harvard. You deed the property to Harvard while reserving the right to live in your home for the rest of your life. You also continue to be responsible for all taxes and upkeep. In exchange for the gift of your home, you receive an income tax charitable deduction for a portion of its appraised value. Your home also is out of your estate for tax purposes.
A charitable remainder trust may be the solution. You would gift the property to the trust and, in turn, the trust sells the property without capital gains tax consequences. You receive an income tax deduction for part of your gift and an annual income stream.
If the art fits with Harvard's current collections, you can take an income tax deduction for the full fair market value of the art. Alternatively, if Harvard does not wish to take the pieces into its permanent collection, you can use the art to fund a life income plan, creating an annual income for yourself as well as possible tax savings.
By gifting a portion of the property to Harvard, you avoid the capital gains tax on the donated portion of the property. (Also note that if you are married, you can shelter up to $500,000 of the sale proceeds from capital gains tax; if you are single, up to $250,000 can be sheltered.)
You also receive an income tax deduction for the appraised value of the portion you donate outright to Harvard. If you opt for a life income arrangement, you receive a deduction for a portion of the value of your gift, in addition to an annual income.
Given your age, you could do a few things:
- Make a gift to the Harvard Growth Fund. While your income would be modest at the start, there is the potential for growth over time. You also receive an attractive income tax deduction.
- Establish a Deferred Gift Annuity. With a Deferred Gift Annuity you make the gift now and postpone your income. By deferring the income, you increase your deduction, as well as your annual income.
- Establish a Charitable Remainder Trust for a 20-year term. This will help you diversify your sources of income. You also receive an immediate income tax charitable deduction. Like the Growth Fund, there is potential for increased income over the 20-year term.
 |
     |
Home
Planned Giving In Depth
|
|
 |
