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Other Planned Gifts
BEQUESTS
A donor may leave cash, securities, or real estate by will to Wake Forest. The value of the bequest is deductible from the estate of the donor. Bequests can take various forms and may be designated for restricted or unrestricted purposes.
Specific bequests designate that Wake Forest is to receive a specific dollar amount or a specific piece of property.
A residuary bequest is used to give Wake Forest all or a portion of a donor's estate after all debts, taxes, expenses, and other bequests have been paid. A bequest can be expressed as a percentage of the estate or of the residuary estate.
A contingent bequest will ensure that property passes to Wake Forest if the donor's primary beneficiaries do not survive him or her.
A bequest also can be used to provide income for a beneficiary by funding a charitable remainder trust or a charitable gift annuity or by being invested in a pooled income fund. If such a gift is made by will, the principal will pass to Wake Forest only after both the donor and the life income beneficiary have died.
LIFE INSURANCE
There are many ways in which life insurance policies can be contributed to Wake Forest. All provide an immediate income tax deduction and may enable the donor to make a much larger gift than might otherwise be possible.
The most direct and simple way of making a gift of life insurance is to name the University owner and beneficiary of an existing policy. The donor receives an income tax deduction for the full cash surrender or paid-up value of the policy. Any future premiums paid on such a policy given to Wake Forest are fully deductible.
A second way of making a gift of life insurance is to purchase a new life insurance policy with Wake Forest as owner and beneficiary. Again, premiums paid on such a policy are fully deductible.
Life insurance also may be used to replace the value of an asset that has been given to Wake Forest. A donor may use the tax savings produced by the charitable deduction from the asset to pay the premiums on a life insurance policy. Such an arrangement can ensure the financial security of one's heirs.
CHARITABLE LEAD TRUST
A charitable lead trust is the opposite of the charitable remainder trust — the donor retains the asset, but designates the income from the asset to Wake Forest for a certain length of time.
In essence, the donor "lends" the asset to the University for the term of the trust. When the trust ends, the asset reverts back to the donor or to beneficiaries designated by the donor.
This type of trust is well-suited for individuals able to forgo substantial income for a number of years, but who want to pass on an asset to their heirs at a discount for gift and estate purposes.
RETIREMENT AND PENSION PLANS
Designating retirement benefits to Wake Forest provides substantial tax savings. Income taxes, as well as estate taxes, typically consume retirement plan assets in such a substantial way that a donor may make a charitable gift of those assets at little cost to his or her heirs. Many of those taxes can be significantly reduced, however, through a properly planned contribution of the retirement plan assets to Wake Forest.
A gift of retirement plan assets may be made to Wake Forest simply by designating the University as beneficiary of all or part of the qualified retirement plan.
Retirement plan assets may also be directed into a charitable remainder trust, which produces favorable tax benefits. The resulting trust can be used to provide income for the donor's spouse or other beneficiaries, such as children.
RETAINED LIFE ESTATE
Donors may give their residence or farm to Wake Forest and receive substantial tax benefits while retaining use of the property for their lifetime and that of their spouse.
Such an arrangement reduces income and estate taxes. An IRS formula is used to determine the charitable income tax deduction, based on the fair market value of the property, the depreciable portion of the home, the remaining useful life of the property, and the donors' ages.
Personal residence is broadly defined to include any property used as a personal residence, even if it is not used as the principal residence.
At the death of the donor or other individual who has a retained life estate in the property, the property is transferred to Wake Forest to be used for purposes originally expressed by the donor. Gifts of real property, in addition to a residence or farm, may be conveyed to the University through a will or contributed to one of the University's life income plans.
EXAMPLE CALCULATION
Gift of personal residence, with life occupancy, made by couple ages 75; original purchase price was $100,000, now valued at $300,000.
Gift to Wake Forest | $300,000 |
Charitable income tax deduction | $98,583 |
Capital gains tax | $0 |
Estate taxes | reduced |
