In addition to benefiting the Lakeland College endowment, a planned gift may allow you to avoid substantial capital gains taxes, income taxes, and estate taxes, while providing an income stream for you and your loved ones.
There are many planned giving vehicles to consider. The most widely used are: bequests, charitable gift annuities, charitable remainder trusts, and life estate agreements. No matter which giving vehicle is right for you, you can have the satisfaction of knowing that your gift will support quality education for many generations to come.
Planned Giving Options
Many alumni and friends of Lakeland College have pledged all or part of their personal estate to Lakeland. These dedicated individuals, thanks to their financial support and bequests to increase the endowment of the college, are helping to provide in perpetuity for future generations of Lakeland students.
To help you include Lakeland College in a bequest, we have provided sample language below to place in your will, codicil, or trust. Your personal attorney can adjust these statements to fit your unique estate situation:
"I give and bequeath ____ % (or a specific dollar amount or describe specific personal property being given) to Lakeland College, Sheboygan, Wisconsin. I request that the total bequest be used in such a manner as the Board of Trustees of Lakeland College shall, in its sole discretion, determine."
"I bequeath ____ % (or a specific dollar amount or describe specific personal property being given) to Lakeland College, Sheboygan, Wisconsin, for the purpose of establishing (state the restricted purpose of how the bequest should be used … i.e. scholarship endowment, building endowment, faculty chair endowment, etc.)."
"I devise and bequeath the entire residue of the property owned by me at my death, real and personal, whatever situate, to Lakeland College, Sheboygan, Wisconsin, for its general purposes."
"If _________(person) or _______________(persons) named as beneficiaries in this will no longer survive me, or if any of my beneficiaries disclaim their portion, then I give and bequeath to Lakeland College, Sheboygan, WI, (then describe property as unrestricted or restricted as noted above.)"
Lakeland College extends its thanks for your consideration of including the college in your estate plans. We hope these samples are helpful to you and your advisors. If you are considering a restricted bequest, Lakeland strongly encourages you to discuss the details of your intentions with a senior member of the college's administration to assure the maximum effectiveness of your bequest.
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.
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.
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.
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
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.