Gift Planning Devices

Charitable Remainder Annuity Trust

Charitable Gift Annuity

Charitable Remainder Unitrust

Deferred Charitable Gift Annuity

Charitable Lead Trust

Bequest

Insurance Gift

Other Ways of Giving

Gift Planning Devices
How They Can Work For You and
the University of South Carolina

Many people would like to make a larger contribution to the University of South Carolina, but they also need to consider financial and family matters. Through the various planned giving strategies available, you can discover a way to make a meaningful gift and enhance your financial security. If you wish to calculate information concerning a gift annuity or trust, please click on GiftCalcs

Charitable Gift Annuity  

The charitable gift annuity provides a gift to USC and, at the same time, an income fund for the donor. In exchange for an acceptable gift of property, marketable securities or cash, USC will contractually agree to pay you and/or another beneficiary a specified annuity for life.

The typical donor tends to:

• need immediate income
  
• like the simplicity of the contract
  
• want to provide a beneficiary with some tax-free income
  
• want the greater income this option provides for older annuitants

The annuity's features include:

• annual income for life based on donor’s age
  
• immediate payment
  
• mix of ordinary, capital-gain and tax-free income
  
• funding by cash, securities, or (in some cases) other property
  
• moderate income-tax deduction

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Deferred Charitable Gift Annuity

The deferred charitable gift annuity, similar to the charitable gift annuity, combines the benefits of making a gift to USC (property, marketable securities, cash) and providing an income fund for the donor. It appeals to younger donors who wish to supplement their income when they reach a later age.

The typical donor tends to:

• have no need for immediate income
  
• like the simplicity of the contract
  
• want a larger tax deduction
  
• make several successive contracts
  
• needs supplemental retirement income
  
• contributes assets other than cash

The annuity features include:

• income for life (a fixed payment)
  
• payments that begin at a future, specified date
  
• mix of ordinary, capital-gain, and (possibly) tax-free income
  
• funding by cash, securities, or (in some cases) other property
  
• income set by deferral period and beneficiary’s life expectancy
  
• higher income-tax deduction than if payments commenced immediately

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Bequest

The bequest is one of the most frequent forms of planned giving.One's estate will receive a full estate tax deduction which can help reduce estate taxes in large estates. In more modest estates, a donor can make a larger gift than would have been possible in one’s lifetime.

The typical donor:

• tends to be older but can be any age
  
• wants flexibility so gift won’t take effect during lifetime
  
• wants to determine how assets will be used

The bequest features include:

• full tax deduction
  
• the option of specifying a sum, asset, percentage, remainder, contingency, or amount governed by estate tax savings

Sample Language

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Insurance Gift

The insurance gift, with the University being named as primary or contingent beneficiary, is a popular gift.

The typical donor:

• tends to be younger because larger gifts are possible with a modest premium
  
• tends to be older when a life insurance policy is no longer needed

The insurance gift features include:

• a charitable deduction for fair market value if given during one’s lifetime with premiums deductible as cash gifts
  
• charitable deduction for replacement value if paid-up policy is donated in one’s lifetime

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Charitable Remainder Annuity Trust

The charitable remainder annuity trust is irrevocable and provides a fixed income based on the value of the assets at the time the trust is created. Capital gains tax can be avoided or postponed when the trust is created, and an income tax deduction is available for a portion of the property value. There can also be estate tax benefits.

The typical donor:

• needs income for life or for a specified term of years
  
• has beneficiaries who prefer a fixed payment
  
• has giving ability of $100,000 or more
  
• seeks security of a fixed payment
  
• has property that has grown substantially in value

The trust features include:

• income for life (a fixed payment)
  
• generally one or two beneficiaries
  
• a high minimum, usually $100,000 or more
  
• funding by cash or highly appreciated securities or real estate
  
• a separately invested trust
  
• flexible, specific investment possibilities

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Charitable Remainder Unitrust

The charitable remainder unitrust is also an irrevocable trust but provides fluctuating income based on a fixed percentage of the annual value of the trust. Capital gains tax can also be avoided or postponed when the trust is created, and an income tax deduction is available for a portion of the value of the property.

The typical donor:

• needs income for life or a specified term of years
  
• needs to see income rise as the value of the trust increases
  
• tolerates some risk in investment portfolio to provide for growth
  
• make small, often repeat gifts
  
• tends to be 60 to 75 years old
  
• seeks moderate income-tax deduction
  
• has property that has grown substantially in value

The trust features include:

• income for life (variable payments)
  
• possibility of multiple beneficiaries
  
• high minimum, usually $100,000 or more
  
• funding by cash or highly appreciated securities or real estate
  
• flexible investment possibilities for the beneficiary

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Charitable Lead Trust

The charitable lead trust allows the donor to provide an institution with income for a period of time determined by the donor (5, 10, 15, 25 years or more). The assets are then given to one or more beneficiaries who receive the remainder trust. It can be possible to transfer assets to heirs with little or no estate and gift taxes due.

The typical donor:

• has substantial holdings and no need for more income
  
• wants to pass assets intact to heirs
  
• wants to minimize transfer taxes
  
• has used a lifetime exclusion
  
• tends to be entrepreneurial (the family business may be the funding asset)
  
• has substantial giving ability
  
• holds assets that are expected to appreciate

The trust features include:

• income to the institution, corpus to heirs
  
• arrangement for assets to pass intact to heirs
  
• an appeal to people with substantial wealth
  
• a deduction applied against gift or estate taxes

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Information provided is prepared exclusively for University of South Carolina alumni and other friends. It is designed to provide accurate information on the topics covered based on court decisions and tax rulings current as of 9/02. Neither the University of South Carolina nor the University Development engages in providing professional legal, financial, or accounting advice. You should consult your personal advisors as to the application of any item to your specific situation.

For additional information on making a gift, please send your name, address, and phone number to: Planned Giving