Lakeland College

Life Income Opportunities

Most people, when they consider making a gift to the college, decide to do so through an outright donation: they write a check; securities are donated; they donate property; or a bequest is made to Lakeland in their will. These are wonderful and easy ways to help support the mission of Lakeland College.

Other alumni and friends of Lakeland take a different approach to giving to the college through the establishment of life income opportunities such as charitable gift annuities, charitable remainder unitrusts, or insurance.

Today, many individuals are finding that the IRS may take a large portion of their estates. And today, IRA's and 401(k)'s and other retirement plans are especially vulnerable because income taxes are still due on them. In addition to benefiting the endowment of Lakeland College, a planned gift may allow you to avoid substantial portions of capital gains taxes, income taxes, and estate taxes, while providing a stream of income for yourself or loved ones. 

A planned gift puts your support of Lakeland into immediate use, making it unnecessary for the assets to clear probate. Unless you specify otherwise, all trusts and annuities upon expiration become a part of Lakeland's endowment. A gift to Lakeland's endowment helps ensure the future of the college. And you can have the satisfaction of knowing that your gift will support quality education at Lakeland College for many generations to come.

What are my planned giving options?

There are many various planned giving vehicles to consider. Most people discover that a small number of simple trusts and gift annuities fit their goals quite well. Most trusts and annuities are easy to establish. First, assets are transferred from a donor to the college or other Trustee. Then, part or all of the income produced by these assets is used to provide income for the donor or other beneficiaries during their lifetime. When the beneficiaries are deceased, the remaining funds become part of the endowment Lakeland's endowment. The most widely used planned giving vehicles are: charitable gift annuities, charitable remainder trusts, and life estate agreements.

Charitable Gift Annuity:

A Charitable Gift Annuity provides a fixed income for the life of the donor and/or a beneficiary(ies). The donor receives a charitable deduction in the year the annuity is established, and a portion of the annual income is tax-free. Gifts of $10,000 are the minimum amount accepted in setting up a Charitable Gift Annuity. The Charitable Gift Annuity program is attractive to prospective donors because of the rates that are offered.

A Charitable Gift Annuity is a contract binding Lakeland College to pay the annuity. Payment is fixed by Lakeland College and is to be paid from the College's general assets. The fixed payment guarantee is one reason for the popularity of the charitable gift annuity. The annuity is part gift and part annuity: the donor makes a gift and also purchases a fixed income for up to two beneficiaries for life. The income amount could commence within the year that the gift is made (immediate annuity) or it can be specified to commence on a date a year or more in the future (deferred annuity). There is a $10,000 gift minimum, a limit of two beneficiaries, and all beneficiaries must have a minimum age of 50 years.

Charitable Deduction

A Charitable Gift Annuity donor is entitled to a charitable income tax deduction for a portion of the value transferred. The actuarial calculation is based on the age of the annuitant, payment frequency, annuity rate, and IRS tables.

 

Example

A 75 year-old donor has $10,000 in appreciated securities that are paying $400 (4%) annually through dividends. This donor could increase his/her income from that asset by over 100% by setting up a gift annuity. If the $10,000 were given to Lakeland College in return for a gift annuity, the annuitant (based on his/her age) would be offered a rate of 8.2% and would receive annual payments of $820.00. In addition, he/she would benefit from an income tax deduction in the year of the gift and deferred capital gains tax due on the appreciation (capital gains tax is spread out over the life expectancy of the donor). The annuity rate is actuarially determined based on the age(s) of the donor(s) and /or beneficiary(ies). The rate is set by the Committee on Gift Annuities and can change periodically. However, once the annuity is set up, the rate is fixed and the payments will not change over the life of the annuity.

Charitable Remainder Trusts:

A Charitable Remainder Trust is an arrangement in which a donor transfers assets to a trust; the trust then pays an income to the donor or beneficiary(s) named by the donor. There are two primary types of Charitable Remainder Trusts. The first provides a fixed income payment to the beneficiary … this is an annuity trust. A trust that provides a variable income stream to the beneficiary(s) is called a unitrust.

The main difference between the two is that the income payment from a unitrust will vary based upon the results of the investment strategy of the trustee who manages the trust's assets. A trust can be established to run for the life of the beneficiary(s), or for a specified number of years. When the trust expires, the remaining assets become part of Lakeland's endowment.

The main benefits of a Charitable Remainder Trust are:

• You and/or loved ones are provided with income for life.
• It may provide a significantly higher income than your assets currently provide.
• Payments are guaranteed by the college in an annuity trust.
• Your gift, and your income payments, has the possibility of growth in a unitrust.
• You receive an immediate income tax deduction for the present value of the gift.
• You bypass all capital gains taxes, if you fund the trust with appreciated assets.
• You may reduce estate taxes, by reducing the size of your taxable estate.
• Income received from the trust may be taxed favorably at lower capital gains rate.
• You may make additional contributions to a unitrust at any time.
• By increasing Lakeland's endowment, you provide lasting support for its mission

Life Estate Agreement:

A life estate agreement allows you to transfer title of a residence or farm that you own (you do not need to live in it) to Lakeland College, while you retain the right to use the residence for your lifetime, or the lifetime of someone you name. You keep any income that the property generates, and you are responsible for its upkeep. Upon death, Lakeland receives the property.

The main benefits of the Life Estate Agreement are:

• You receive an immediate income tax deduction at the time the agreement is established.
• You may bypass capital gains taxes, if the residence has appreciated in value.
• You receive an estate tax deduction.
• You retain a life interest in the property.
• By increasing Lakeland's endowment, you provide lasting support for its mission.
• In conclusion, make sure you discuss any questions or concerns you may have with your attorney, accountant, or financial planner.