Planned and Deferred Giving (additional information)

GIFT ANNUITIES - Example: a Buckingham alumna, age 72, opens a Gift Annuity for $20,000 funded with stock with a cost basis of $10,000. Her current dividend yield is 2% or $400.00 per year.

The rate on the Gift Annuity is 6.2% which will produce an annual income of $1,240.00 which is more than 3 times the dividend income. In addition, $383.00 of the gift annuity income is tax-free which increases the effective yield on the annuity over the nominal 6.2%. Our alumna will not pay any capital gains tax at the time of the gift, and she will have a $8,897.00 charitable tax deduction which she can carry forward for five additional years.
This is a veritable WIN/WIN situation for the donor and the School.

CHARITABLE REMAINDER TRUST - The charitable remainder trust allows a donor, and/or others, to receive an income for life or for a fixed term up to 20 years. The trust can be set up during the donor's life or through his or her will. When the trust term ends, the principal passes to BB&N. The trust can be funded with cash, appreciated stock, closely held stock or real estate; the benefits include an income for life, no capital gains tax on appreciated assets and a charitable tax deduction.

Example: Adam and Joan Smith, BB&N grandparents, fund a Unitrust with stock valued at $200,000 (cost basis $50,000). The stock pays a dividend of 1.5% or $3,000 per year.

The rate on the Unitrust is 5% and the couple receives $10,000 the first year, which is an increase in their annual income of $7,000 that year. Income in the following years will depend on the value of the trust each year, and could go up or down accordingly. They also have a charitable tax deduction of $88,262 which can be carried forward for five years; and, they do not pay any capital gains tax on the appreciated stock they used to fund the trust (the full value of the stock, $200,000 is invested for them).

LEAD TRUST - A Lead Trust can be a cost-effective way to pass assets while minimizing gift and estate taxes.

Assets such as securities are transferred to a charitable lead trust established during the donor's life or through his or her will. The donor designates BB&N to receive the income from the trust; at the end of the trust term the assets are distributed to named beneficiaries. Properly constructed, a lead trust minimizes estate gift taxes, removes assets from the donor's taxable estate, provides annual income to BB&N for the term of the trust, and avoids taxes on the income earned by the assets while they are in the trust.