University of Delaware Office of Public Relations The Messenger Vol. 6, No. 1/1996 Recognition: A Special Report Planned Giving For more than 250 years, the University of Delaware has benefitted from the generosity of committed alumni and friends who have included the University in their estate or financial plans. Such special gifts have helped provide scholarships for talented undergraduate students, fellowships for deserving graduate students and vital support for the research and teaching endeavors of dedicated and outstanding faculty. Bequests and other planned gifts also have helped to build new buildings and to enhance and preserve existing facilities on campus. The additional financial benefits associated with many planned gifts may make it possible for you to support the work of the University to an even greater extent than you thought possible. The University is grateful for all types of gifts and welcomes the opportunity to work with you and your personal advisers to determine if one or more planned giving arrangements are appropriate for you. Ten taxwise ways to invest in the University of Delaware 1. Bequests The unlimited estate tax charitable deduction encourages such gifts by reducing federal and state inheritance tax. Charitable bequests can take several forms: * specified amount of cash * specific piece of property * residual estate after all expenses, debts, taxes and specific bequests are satisfied * percentage of the residuary estate * contingent bequest (when your named beneficiaries die before you or refuse their bequests) 2. Revocable Living Trust This trust can include a gift to the University of a specific amount of cash, a specific property, a percentage of the trust assets or all or part of the trust assets after providing for other named beneficiaries. 3. Life-Income Gifts Special arrangements can enable you to receive income for yourself and another designated person, such as an elderly parent, a child or your spouse. By itemizing deductions, you get a charitable income tax deduction for your gifts, while avoiding or substantially reducing capital gains tax on the sale and reinvestment of assets used to fund the life-income gift. Such life-income gifts include: * Pooled Income Fund Gift You may transfer securities and/or cash to the UD and your gift is added to the University's Pooled Income Fund, where it is invested. You will then receive your pro rata portion of the fund's earnings for your lifetime. * Charitable Remainder Trusts You may transfer cash, securities and/or real estate to an irrevocable trust that then pays you income-usually for your lifetime. You can choose either fixed payments based on the value of the assets when the trust is created or a variable income stream based on the value of the trust as revalued each year. * Charitable Gift Annuities You may transfer cash and/or securities or real estate to the University and receive a fixed annuity for life. The transaction is partly a charitable gift and partly the purchase of an annuity. Charitable gift annuities can be either immediate or deferred. Donors can begin receiving their annuity payments at some specified time in the future, while immediately receiving a charitable income tax deduction. 4. Gift of Your Home or Farm You may wish to deed a personal residence or farm to the University now but retain the legal right for you and a survivor to live there for life. A substantial income tax deduction is available immediately and all the estate tax savings of a charitable bequest also are retained. 5. Real Estate or Securities If you contribute real estate or securities held for longer than one year, your income tax charitable deduction will be based on the asset's full fair market value, avoiding all capital gains tax on the property's increase in value. When giving securities, your broker can electronically transfer the securities to the University or you can send unsigned stock certificates and a signed stock power. If you endorse the certificates on the back, no stock power is required, but your signature must be guaranteed by a broker or appropriate officer of a bank. 6. Life Insurance You can designate the University as the beneficiary of either a new or paid-up policy. No income tax deduction is generated; however, there will be no estate tax liability on the value of the gift to the University. You also can name the University as a contingent beneficiary, should your primary beneficiary not survive you. Or, you can make an irrevocable assignment of ownership of an insurance policy to the University, receiving an immediate income tax deduction based on the lesser of the policy's value or the net premiums paid. You also may receive additional income tax deductions for future contributions made to the University for the payment of premiums. 7. Tangible Personal Property When donating such items as works of art, antiques or books, your deduction is based on the fair market value, providing the University's use of the property is related to its educational function. If the use is unrelated, the deduction is based on the lesser of your cost basis or fair market value. 8. Bargain Sales When you sell assets such as long-term appreciated securities or real estate to the University at a price below fair market value, you have made a gift of the difference between the value and the sales price received. A pro rata portion of any capital gains tax is avoided on the transaction. 9. Charitable Lead Trust Assets can be transferred to an irrevocable trust, which then makes payments to the University for a stated term. Trust assets can be returned to you at the end of the trust term or you can designate other individuals, such as younger family members, to receive the trust assets. This reduces or even eliminates the gift or estate tax imposed when passing property on to other family members. (It is important that your own tax adviser assess tax consequences before proceeding.) 10. Cash You may make a gift of cash, which is deductible up to 50 percent of your adjusted gross income, if you itemize deductions. HOW TO TRANSFER STOCK TO THE UNIVERSITY Many people find it attractive to make a gift of stock. If you transfer stock that has been held for more than a year and has increased in value, the University can sell the stock and you avoid all capital gains tax. If your stock has been held for more than a year and has decreased in value, it may be more advantageous for you to sell the stock and make a gift of cash to the University. Stock gifts can be made in one of the following ways: 1. If you hold the stock certificate in your name, you can endorse and date the back of the certificate, assigning it to the University. Your signature must be guaranteed by a broker or appropriate officer of a bank. Another option is to obtain a stock power from a bank or broker or you may call the Office of University Development at (302) 831-2104. When using the stock power, fill in only the signature(s) and the date at the bottom. Please deliver or mail the certificate(s) and stock power by certified mail to: Ms. Viola Manogue Administrative Coordinator Office of the Treasurer 112 Hullihen Hall University of Delaware Newark, DE 19716 or Ms. Paula Tilmon, Esq. Office of University Development Academy Building Main Street University of Delaware Newark, DE 19716 If mailed, the certificates and the stock power should be sent separately. The date of the gift will be the day the certificate is delivered to the University or, if mailed, the postmark date. 2. If the stock is held in a street account, you may instruct your broker to place the shares into an account in the name of the University of Delaware. This should be confirmed in writing and the broker should be instructed to contact the administrative coordinator for instructions on disposal of the shares. A copy of your note to the broker should also be sent to the University treasurer's office. 3. If the stock certificate is made out in the name of the University, no stock power is needed. 4. If giving fractional shares, the University can assist you with your gift. 5. Stock also can be transferred directly to the University's brokerage account via Depository Trust Co. (DTC). The University's DTC transfer number is 2215. Instructions should be given to place the stock in the University of Delaware's Gift Account, Number 6727-3, at Wilmington Trust Co. For assistance in making a gift of stock, please contact the Office of University Development at (302) 831-2104 or the Office of the University Treasurer at (302) 831-2130. The University provides professionals to assist you in planning your gift. Recognizing the highly personal nature of such planning, these professionals assure that all inquiries are held in the strictest confidence. For assistance or additional information on charitable gift and estate planning opportunities, please contact: Paula M. Tilmon, Esq. Director, Trusts and Estates Office of University Development Telephone (302) 831-2104 A 1966 graduate of the University of Delaware and the daughter, spouse and parent of Delaware graduates, Paula Tilmon shares your commitment to the University of Delaware and welcomes the opportunity to assist you in meeting your charitable gift and estate planning goals. Allow us to send you a free brochure. If you would like more information on how a gift to the University may fit in with your estate planning, tax and financial goals, please allow us to send you a new brochure entitled Your Guide To Effective Giving. For your complimentary copy, call Ms. Tilmon at (302) 831- 2104 or mail your request to her at the Office of University Development, Academy Building, University of Delaware, Newark, DE 19716.