Planned giving offers friends and alumni the opportunity to support Florida International University through a variety of tax-beneficial options and opportunities as they consider their estate planning. Planned gifts are generally commitments made in the present with the benefit to FIU deferred until
a future date. Such gift arrangements often provide the donor with significant income or estate tax deductions.
Depending on the type of gift arrangement and the donor's specific financial circumstances, comprehensive gift planning can provide some or all of the following benefits:
Including FIU in your will: What follows is suggested language that you can provide to an attorney in preparing or revising your will.
I hereby give, devise and bequeath [describe the nature of the bequest, such as a specific sum of money or a percentage of the residual estate] to FLORIDA INTERNATIONAL UNIVERSITY FOUNDATION, INC., of Miami, Florida, a direct support organization for the benefit of Florida International University, the sum of $_______ (or _____ percent of my residuary estate), to be used for (e.g., its general endowment purposes, to establish a named endowed scholarship, to benefit a specific school or college within FIU, or some other specific purpose). My bequest may be used to apply for any state, federal, or private matching funds for which it may qualify.
The Charitable Gift Annuity.
A charitable gift annuity is a simple contract between an individual and the FIU Foundation. In this agreement, the donor irrevocably transfers cash, securities or other assets to the FIU Foundation in exchange for a fixed annual payment for one or two annuitants for life. The amount of the annuity payment depends primarily on the age of the annuitant(s) – the older the annuitants, the higher the rate of the annuity payment. Annuity payments are generally immediate , with payments beginning at the end of the quarter that assets are transferred, but also can be deferred , with payments beginning at a future date agreed upon at the time the assets are transferred.
Benefits: As noted above, the amount of the annuity payment from a charitable gift annuity varies with the age of the annuitant(s). The benefits are as follows:
- A stable, fixed income for the life of each annuitant.
- In most cases, a significant portion of the annual income is tax-free (the percentage of tax-free income depends upon the age of each annuitant).
- In most cases, significantly increased income from assets used to fund the annuity (e.g., cash from certificates of deposit or stock paying minimal dividends).
- A substantial income tax deduction in the year the gift is made.
- Can reduce estate taxes and estate administration expenses.
- For annuities funded with appreciated securities, forgiveness of a substantial portion of capital gains tax, with the remainder spread out over several years.
Establishing a Charitable Gift Annuity at FIU: The FIU Foundation has been authorized to issue charitable gift annuities by the Florida Department of Insurance and currently has several in force. Annuity payments are guaranteed by the general assets of the FIU Foundation, which currently exceed $80 million. The minimum to establish a charitable gift annuity with the FIU Foundation is $20,000. There is no maximum amount.
FIU's Office of Planned Giving will be happy to provide you with a free customized computer analysis of rates, tax deductions and other benefits of either a single-life or two-life charitable gift annuity suitable to your situation. For additional information or to request an application form, please contact Roger Wyman, Director of Planned Giving, at the address below.
Charitable Remainder Trusts
Charitable remainder trusts are popular estate planning tools because of the planning flexibility they afford. A donor irrevocably transfers assets to a trustee, under a trust agreement that specifies how both income and principal are to be distributed. Such trusts generally pay income to the donor or other specified individuals for either their lifetimes or a period of up to 20 years. At the termination of the trust, the remainder is distributed to one or more charitable beneficiaries.
Charitable remainder trusts can take one of two forms.
- The charitable remainder unitrust provides for annual payments to the income beneficiary or beneficiaries equal to a fixed percentage of the assets of the trust, revalued annually . As a result, the annual income from the trust varies according to the investment of the assets in the trust. The donor determines the fixed percentage (no less than 5%) when the trust is formed.
- The charitable remainder annuity trust provides for a fixed dollar payout per year, which must be equal to 5% of the assets transferred to the trust. The choice of which type of charitable remainder trust is appropriate depends on the donor's income objectives, tolerance for risk, and charitable intentions. And, within the framework of the charitable remainder unitrust, there is a wide variety of options to structure income streams to meet the donor's short-term and long-term financial goals.
Benefits: Some of the benefits of charitable reminder trusts include:
- Income for life or a period of years that might exceed income from assets used to fund the trust.
- The unitrust form can provide income that may increase over time as a hedge against inflation, and its income stream can be adjusted to meet changing needs over time. The annuity trust can provide the security of a fixed income investment.
- Forgiveness of capital gains taxes if the trust is funded with appreciated property.
- A substantial income tax deduction in the year the gift is made.
- Can reduce estate taxes and estate administration expenses.
- Wealth replacement techniques can minimize or eliminate fear that inheritance for loved ones will diminish because assets are removed from taxable estate.
Establishing a charitable remainder trust necessitates the assistance of an experienced tax or estate planning attorney. For more information about charitable remainder trusts and a free customized computer analysis of its benefits that fits your financial situation, contact Roger Wyman at the address below.
Charitable Lead Trust
Charitable lead trusts are gift plans defined by federal law that allow individuals to transfer assets to family members at reduced tax cost while at the same time making a significant gift to charities such as FIU. They have become increasingly popular since the 1990s since they are especially effective during times of relatively low prevailing interest rates.
Sometimes described as “the reverse” of a charitable remainder trust, under a charitable lead trust an individual irrevocably transfers assets, usually cash or securities, to a trustee, usually a financial institution. During the trust's term, usually a fixed number of years, the trustee invests the trust's assets. Each year, the trustee makes payment to one or more charities out of the trust's income, or trust principal if the income is not adequate. When the trust term ends, the trustee distributes the accumulated trust assets to family members or other beneficiaries named by the donor. In most cases, the accumulated assets pass to
family members on a tax-free basis. Adjustments in the payout rate to charity and the term of years of the trust can be made to maximize either gift or estate tax deductions.
A charitable lead trust can also take either the unitrust or annuity trust form. Under a non-grantor charitable lead unitrust , the trustee makes payments to charity based on a fixed percentage of the trust's assets, revalued annually. With a non-grantor charitable lead annuity trust , the trustee distributes a fixed dollar amount to the charitable beneficiaries each year.
Benefits: benefits of a charitable lead trust include the following:
- Trusts created during a donor's lifetime qualify for a significant gift tax deduction ; trusts created by will qualify for an estate tax deduction .
- Beneficiaries of the trust (usually family members, including grandchildren) will receive all the trust's assets when it terminates. Any asset growth that occurs during the period will be distributed to the beneficiaries free of gift or estate tax.
- FIU and any other charitable beneficiaries receive gifts for the entire term of the trust.
Establishing a charitable lead trust necessitates the assistance of an experienced tax or estate planning attorney. For more information about charitable remainder trusts and a free customized computer analysis of its benefits that fits your financial situation, contact Roger Wyman at the address below.
Life Insurance
Under the right circumstances, a gift of a life insurance policy can be an effective charitable instrument. This is particularly true of paid-up policies that no longer serve the purpose for which they were originally intended. For example, a policy that a parent took out on a child who is now grown and financially secure can be an effective way to make a deferred gift at no cost.
A gift of a life insurance policy qualifies for an income tax deduction if FIU is made both the owner and beneficiary of the policy. If the policy is not fully paid-up, donors usually continue to make annual tax-deductible gifts to the University, which then continues to make premium payments.
Real Estate
An outright gift of real estate to FIU entitles the donor to a federal income tax charitable contribution deduction for the full fair market value of the property on the date the gift is made. The FIU Foundation must approve in advance any potential gift of real estate.
A retained life estate allows the donor to give their residence to FIU now, but retain the right for them (or someone else) to have possession of the property and receive any income from the property for life. The donor is entitled to a current federal income tax charitable contribution deduction for the value of FIU's remainder interest in the property.
For additional information on any of these options, including free customized computer analysis of a gift plan to fit your specific circumstances, please contact:
