Planned Giving Opportunities

Examples of Planned Gifts

1. Life Insurance

   Most people purchase life insurance policies to protect themselves and their loved ones, often at a time when their estate is small. They want to make sure their beneficiaries receive funds immediately. Long-standing insurance policies are sometimes no longer necessary where substantial other investments and benefits will yield a good income for your family after your lifetime. Life insurance could be the most sensible way for you to make a significant charitable gift and provides a number of benefits:

   • The donor can get a tax deduction. By naming Southwestern as the beneficiary, the donor may receive a valuable income tax charitable deduction and reduce the size of your taxable estate. A gift of life insurance also reduces the "bite" from estate taxes - proceeds from the policy will be fully excludable from your estate.
   • The donor's income won't be reduced. Unlike a gift of an income-producing asset, a gift of an insurance policy won't reduce current income.
   • The donor's cash flow may increase. If the donor stops paying the policy premiums, they will enjoy an increase in spendable income. Or if they continue paying the premiums on a policy donated to Southwestern, the donor is allowed an annual income tax deduction. Life insurance is more valuable than ever.

   By a gift of insurance to Southwestern, donors can save taxes and increase your spendable income. Such gifts are easily arranged; ownership can be transferred without the expenses associated with wills, codicils or trust formation. In concert with your financial advisors, Southwestern can help the donor learn and evaluate how to get the most from a contribution in the form of life insurance.

2. Charitable Lead Trust

   A lead trust is one created by a donor to pay income to Southwestern during the trust term, after which the corpus then passes either back to the donor or to another beneficiary. If the lead trust is created during the donor's lifetime, an income tax deduction will be allowed for the present value of the income interest Southwestern receives. If the lead trust is instead testamentary, an estate tax deduction of the present value of the income interest will be allowed.

3. Charitable Remainder Trust

   The opposite of a lead trust, a remainder trust permits a donor, spouse and children to retain the income from assets set aside now in trust for Southwestern.

   The donor establishes a trust that pays them and their spouse (or other income beneficiary) income for life, with Southwestern receiving the corpus of the trust at the end of their lifetimes. The donor can receive either a fluctuating income based on a fixed percentage of the trust’s annual value (unitrust) or a fixed income that is determined at the creation of the trust (annuity trust).

   There is typically no income, gift or estate tax payable on the initial transfer of the assets to the trust. Furthermore, donors enjoy an immediate income-tax deduction based on the present value of the gift that Southwestern will receive at the end of the trust term. If the assets transferred to the trust have appreciated since you acquired, then capital gains tax will also be avoided and your income tax deduction will be based on the higher, appreciated, value of that asset. An additional advantage might be increased income if low-yield property is donated and the proceeds are invested in higher-yield assets within the trust.

4. Charitable Gift Annuity

   The Gift Annuity Program offers a simple, secure and rewarding way to support the future of Southwestern.

   Cash or other assets can be transferred to Southwestern's annuity program to enjoy guaranteed regular payments for life. The amount of each payment is determined by the age(s) of the annuitant(s) when the annuity is initially funded. You can have as many as two annuitants. Once the payments are determined, they remain fixed for the annuitant’s lifetime. A gift annuity may also be established for someone in the donor's will. A donor can also make a gift now, and defer or postpone the income until a later date. The payments will then be based on your original contribution plus accumulated interest. At the death of the last annuitant, your gift comes to Southwestern without the delay of probate. The donor is entitled to a current income tax deduction for the present value of a gift to Southwestern, and part of each payment they receive will also be tax-free. The donor is also able to avoid capital gains tax upon the transfer of an appreciated asset to the program.

5. Charitable Bequest

   The most widely used method for planned giving is a bequest in a Last Will and Testament. A charitable bequest may be in the form of cash, real estate, securities, or other property. There are several ways to provide for Southwestern by bequest. Click here for more information.

6. Appreciated Property

   This includes gifts of stocks, bonds, real estate, or other appreciated assets that cause capital gains to be realized when the asset is sold. By giving the asset to charity instead of selling it, capital gains tax is avoided.