Deferred Gifts*

Deferred gifts* are often called “planned gifts” because they are integrally connected to your financial and/or estate plans. They range in size from smaller bequests to multi-million dollar trusts. They are called deferred gifts because even though they are given today, the benefits will not be realized until sometime in the future by the College of Agricultural and Environmental Sciences (CAES).

Deferred gifts are divided into two general categories:
Estate Gifts and Life Income Gifts

If you would like to make a gift to the College of Agricultural and Environmental Sciences, or would like to learn more about giving opportunities, contact Rob Cooper, Director of Development, Office of College Advancement, at (706) 542-3390 or via e-mail at ocamgr@uga.edu.

Note: Your contribution can be designated to support a specific purpose that is important to you, or left unrestricted to be used where the need is greatest. All situations are unique, and you are encouraged to consult your financial advisor regarding IRS regulations and your opportunities to give.

Estate Gifts

Estate gifts are those gifts normally associated with your Will or final distribution of your estate and have been traditionally the largest gifts to the CAES. Estate gifts may be a few hundred dollars or millions of dollars. Like all other gifts they may be "unrestricted" for use where need is greatest within the college, or "restricted" to a particular program, scholarship, or location. Your estate gift allows your assets to continue helping the CAES long after you are gone.

Estate gifts are typically the largest gifts to the college and are made up of the following:

• Charitable Gift Annuities include Annuity Trusts and Unitrusts. These allow you to avoid taxes on capital gains and reduce estate taxes.
• Charitable Remainder Trusts and Unitrusts provide lifetime benefits to you, the donor, and the CAES.
• Life Estate Agreements allow you to give your home or farm to the CAES, but retain the right to occupy and use the property for life.
• Bequests, or gifts by Will, are popular options for those who want to provide for the CAES in the future.
• Life Insurance Policies are ways to make a significant gift to the CAES. Paid-up policies and policies in progress are accepted.
  

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Charitable Gift Annuity

A Charitable Gift Annuity is a simple agreement between you and the Arch Foundation designating a gift for the CAES. In exchange for your gift of cash, securities, or certain types of other assets (possibly real estate or timber rights), the Arch Foundation will agree to make fixed, periodic payments to you and/or another beneficiary for life. A portion of the payment to you may be tax-free, or taxed at the more favorable rate for taxes on capital gains. You will be entitled to an immediate federal income tax deduction for a portion of your gift. The amount of the deduction will be based upon the amount of the gift, your age and/or another beneficiary, and the annuity payment rate. When the gift annuity ends, its remaining principal passes to the Arch Foundation to be used per your designation with the CAES.

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Charitable Remainder Trusts

There are two main types of charitable remainder trusts: Annuity Trusts and Unitrusts. With both types of trusts, you receive a charitable contribution income tax deduction based on your life expectancy, you avoid taxes on capital gains on the sale of appreciated securities or real estate, and you reduce potential estate taxes. The main difference between the two types of charitable remainder trusts is the way your annual income from the trust is determined.

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Charitable Remainder Unitrusts allow you to transfer cash, securities, or other property to a trust and are usually created with assets worth $250,000 or more. The assets given to charitable remainder unitrusts are valued each year, allowing for a variable payout from year to year, in contrast to the fixed dollar amount payout from the annuity trust. The unitrust is often used when inflation and its effect on the future purchasing power of a fixed income is a concern and you want to benefit you and/or another beneficiary for life.

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Charitable Remainder Trusts and Life Insurance Trusts (Wealth Replacement Trusts) offer a combination of a trust and life insurance. The charitable remainder trust provides lifetime benefits to you, the donor, and then after death to the CAES. The life insurance trust replaces to your heirs the asset value given to charity and may increase your heirs' net inheritance over what they would have received had you not made the charitable gift.

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Life Estate Agreements (Retained Life Estates)

A life estate agreement allows you to give your home and/or farm to the University today, but retain the right to live in the home or use the farm for life. You may also stipulate that your spouse may continue to live there for his/her lifetime. You receive an immediate income tax deduction based upon your age(s) and the useful life of the property, and you remove the home and/or farm value from your estate. However, you must continue to maintain the property, insure it, and pay property taxes. After your death, the Arch Foundation becomes owner of the property and may utilize the property to support college-related purposes or sell the property to generate funds to support the college.

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Bequests (Gifts by Will)

A bequest may be particularly attractive as a gift option if you want to provide for the CAES in the future. Bequests may be designated to the CAES program of your choosing or used where the need is greatest within the college.

"Specific" bequests are most common. You leave a specific amount of money, a specific asset, or a specific percentage of your estate to support the CAES.

"Residual" bequests go to support the CAES only after all debts, expenses, taxes, and other bequests have been paid.

"Contingent" bequests are ways for you to support the CAES even if you have young children. The contingent bequest takes effect only when all other bequests fail.

Note: If you intend to leave a gift to benefit the CAES in your will, please consult the following options to learn more about will language.

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Life Insurance Policies

Two forms of life insurance are typically donated: paid-up whole and universal life insurance policies, and newly issued whole and universal life insurance policies. A paid-up policy has a cash value that may be used immediately if necessary to support the CAES.

Taking out a new whole life or universal life insurance policy is one way to make a significant gift to the CAES. The policy may be structured such that you only pay premiums for approximately ten years and each year's premium payment is tax-deductible.

Newly issued whole and universal life insurance policies usually have little or no cash value. Therefore, they provide no benefits until significant cash value builds within the policy or the insured passes away.

For all whole and universal life insurance policies, you should name the Arch Foundation as both owner and beneficiary.

Note: If a person makes the Arch Foundation a beneficiary of a life insurance policy, no income tax deduction is allowed. However, upon the death of the insured, the policy proceeds going to the Arch Foundation will be an estate tax charitable deduction, with the proceeds being used in the college as you designate.

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Life Income Gifts

Life Income Gifts are often referred to as the gift that gives back to you. You may make a gift of cash, securities, and/or real estate to the CAES and retain the right to receive income from those assets for as long as you live. At your death and/or the death of the last beneficiary, the CAES receives the remaining principal to be used as you have indicated. Life income gifts provide either an income or the use of some asset for the duration of your life.

Life income gifts are made up of the following:

• Pooled Income Funds allow you to give away assets while retaining the right to receive interest income.
• Qualified Retirement Plan Assets allow you to pass on your assets free of estate and income tax.

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Pooled Income Funds

Pooled Income Funds are designed to allow you to give away assets, such as stocks or bank savings, while keeping the right to receive the interest and/or dividend income. The CAES may use the remaining principal only after your death (and the death of one surviving beneficiary if one is designated).

A pooled income fund gift provides several financial and estate planning benefits:

1. You retain income for life (if you donate a typical dividend-paying stock you may approximately double the quarterly income you were receiving).
2. You avoid taxes on capital gains on the sale of appreciated securities.
3. You remove all or most of the assets donated from your estate, thereby reducing potential estate taxes.
4. You receive an income tax deduction based upon your age (usually around 40% of the amount donated).
5. You eliminate your day-to-day investment decisions and worries.
6. Eventually, your gift will be a significant benefit to the CAES.

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Qualified Retirement Plan Assets

Historically, a personal residence was the largest asset in an estate. Currently, because of changes in tax laws and the tremendous historical growth of the equity markets, qualified retirement plans occupy a significant portion of many, if not all, taxable estates. The rise in the value of the assets held in qualified retirement plans has created new problems and opportunities. In most cases, qualified retirement plans subject the owner, their heirs, or their estate to income tax liability, as well as potential estate tax liability. A gift of a qualified retirement plan asset can offset these liabilities.

Funds set aside in your tax-deferred retirement accounts are tax-deferred, not tax-free. You will pay taxes on the income you receive in distribution from these plans. There are ways to minimize the tax burden of holding these plans until death. Instead of leaving these tax-deferred retirement assets to your family, who will pay the resulting income taxes, consider designating the Arch Foundation as the named beneficiary of your qualified retirement plan to support the CAES. This designated gift will pass your assets free of estate and income tax.

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