A bequest is a gift made in a will. A substantial portion of the gift income which the University of Delaware has received over the years has come from bequests. Donors have realized that bequests, no matter how modest, help the University pursue its mission of teaching, research and public service.
A bequest to the University may be made in the body of your will or it may be added as a codicil so that the entire will does not have to be rewritten. It should be accomplished in consultation with your attorney. A bequest to the University is not subject to federal estate or any state inheritance taxes.
Significant tax benefits may be gained by donating appreciated securities to the University. If otherwise deductible, the current full fair market value may be deducted as a charitable contribution, and the donor avoids tax on the appreciated value when the gift is made.
You may transfer shares of stock in your closely held corporation to the University and take a charitable deduction for the fair market value of the stock.
Donating real estate is becoming an increasingly popular way to provide financial support for the University. Real estate gifts are generally deductible at full market value, either up to 50 percent of adjusted gross income, or up to 30 percent if there is a long-term appreciation. Any excess deduction may be carried over for five additional years.
Many buildings and programs of the University have been enhanced by such gifts-in-kind as rare books and manuscripts, paintings, antiques and other art objects.
The donor of appreciated tangible property held long-term is entitled to an income tax deduction for the full fair market value of the item if the University’s use of the object is directly related to the University’s tax-exempt purpose. If the use is not related to the University’s tax-exempt purpose, the donor is entitled to a tax deduction for only the original cost of the property.
For many people, life insurance affords a practical means of making a significant gift to the University. It is possible to assign ownership of a policy that is no longer needed for personal or family protection, or to take out a new policy with the University as owner and beneficiary.
The unitrust pays the donor and/or another individual a fixed percentage (5 percent or more) of the annual fair market value of the trust assets. The trust may pay income for the life of one or two persons, or for a fixed period of time. The payout percentage is agreed upon by the University and the donor at the time the unitrust is created.
The charitable remainder annuity trust pays the donor and/or another individual a fixed amount a year for life, or for a fixed number of years. The amount is determined by the donor and the University, but must be at least 5 percent of the market value of the trust assets at the time the trust is created. For this reason, one cannot make subsequent additions to the trust.
In return for a gift of cash or appreciated securities, the donor receives a certain sum annually for life. A current tax deduction is available for a portion of the amount donated. Gift annuities paid to two beneficiaries are also available.
The amount to be received annually is determined by the donor’s
age and the age of any other annuitant at the time the annuity agreement
is established. Generally, a substantial portion of each payment received
is exempt from income taxes for a period of time.
A gift of $10,000 or more is typically required to establish a charitable gift annuity with the University.
A gift of cash or securities is combined for investment purposes in a pooled fund with similar gifts from other donors. The donor receives a proportionate share of the Fund’s annual net income for life. In addition, the donor may designate on surviving income beneficiary
One can participate in the pooled income fund at the University of Delaware with a gift of $5,000 or more. Additional gifts of $1,000 or more can be made.
Some donors find it advantageous to donate the income from an asset to the University for a period of years, without contributing the income-producing asset itself. This can be done through the establishment of a charitable lead trust. A lead trust may be funded with bonds, publicly traded stock, closely held stock or income producing real estate. By creating a lead trust you are essentially letting the University “borrow” the asset and benefit from the income for a limited period while ensuring substantial tax benefits.
In most cases, a charitable lead trust does not qualify for an income tax charitable deduction but the donor is generally not taxed on the income. However, it may be very attractive if you wish to pass the property to others, such as younger family members, with substantially less estate or gift tax cost.
A very attractive alternative for some individuals is transferring a personal residence, vacation home, or farm to the University while reserving for the donor the right to occupy the home for as long as the donor or donor and spouse live.
Under this plan, the donor is entitled to an immediate charitable deduction for the remainder value of the property. The deduction depends on the donor’s age at the time of the gift, the property’s appraised value, and depreciation on the property.