- Gift Planning Options
- Alumni Supporting Haverford
- Planning Tools
The IRS discount rate has dropped to 1.0—an historic low. Lower interest rates mean lower estate and gift tax on the remainder of the lead trust assets that will pass to your heirs. To find out more on CLATs, click here
Establishing a Life Income Plan at Haverford College
Life income plans provide means by which you can make a gift to Haverford while retaining the right to receive income from the gift. In exchange for your commitment now, you are entitled to a current charitable income tax deduction (for the value of Haverford's future interest), as well as income to you, your spouse, or any other person whom you designate. The amount of the income payments depends upon the type of life income plan you select.
Also, a well-planned charitable gift can provide lifetime income for a dependent, either now or in the future. You can set up a life income plan in your will that provides income to a surviving spouse, and eventually a gift to Haverford.
What are the Options?
Haverford offers a variety of plans which can be used to achieve different results. Your needs determine the choice of plan. The Office of Gift Planning will be glad to provide you with specific information about the plans. Here is a brief overview of the major options.
• Charitable Remainder Trusts
• Charitable Gift Annuities
• Deferred Gift Annuities
• Donor Advised Funds
• Pooled Income Fund
Management of Life Income Plans
The Board of Managers has selected State Street Bank & Trust Company to serve as trustee for the life income plans at the College. Your plan will benefit from the professional investment management available at State Street Bank. These services include the investment of the assets, the preparation of the quarterly income checks, and the submission of the necessary tax reporting information. The College has a dedicated representative at State Street Bank who can answer any questions you may have.
Life income plans offer several important tax benefits. These include the following:
• A current charitable income tax deduction
• Avoidance of capital gains taxes
• Reduction of estate tax liability
The ability to increase income compared with the current dividend return from the funding asset, such as low-yielding securities.
The size of your tax deduction depends upon the type of plan selected and the age of the beneficiaries. Generally, the tax deduction increases with the age of the income beneficiary. A plan providing income for two beneficiaries (for example, a husband and wife) produces a smaller tax deduction than a one-life plan. You are entitled to take the tax deduction on your current federal income tax return.
For most of the life income plans, any capital gain that might result from donating appreciated property (appreciated stock or real estate) would be completely avoided. Furthermore, the charitable deduction for your gift is based on the current fair market value of the property and not the lower cost basis.
You may be entitled to estate tax savings for life income gifts. If your estate would otherwise be subject to federal estate tax, substantial savings can be achieved.
The gift you create through a life income plan is of vital importance to the College. When life income gifts pass to the College, they become part of the working endowment. Although unrestricted endowment provides the greatest flexibility for the Board of Managers, you can designate your gift for a specific purpose. For example, life income gifts can be used to create named scholarships, professorships, lectureships, scientific equipment funds and faculty research funds. All life income gifts will be credited to reunion fund efforts.
The Office of Gift Planning will be happy to discuss life income plans with you in more detail. Information is available on each of the life income plans. In addition, you can receive a personal illustration, which will show your charitable deduction and income payments from any of the plans. Interested alumni and friends can request a draft trust document for review by their attorney, as well as a sample investment portfolio for a trust account.
If you're interested in learning more about a plan that could fit both your immediate needs and our long-range goals, please contact Steve Kavanaugh at 610-896-1141, or via e-mail at email@example.com, or Margaret Gindhart at 610-896-1329, e-mail firstname.lastname@example.org, for a no-obligation consultation.
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