Planned Giving (Heritage Society)
Providing for the future well-being of family, and, at the same time, supporting the mission of Creighton Prep can be accomplished by a variety of gifts known as planned gifts. These are truly Gifts of a Lifetime. Individuals who have made such gifts are included in the school's Heritage Society.
Planned gifts, such as bequests and income-producing gifts, can provide benefits to family now and in the future, and are gifts that will live on, benefitting Creighton Prep for many generations to come. Other giving opportunities, including the use of retirement assets, allow for maximizing the current and future benefit to both family and the school. Contact Fr. George Sullivan, S.J. with questions.
***Reviewed by: William J. Lindsay, Jr. '72 J.D., LLM. Tax
After providing for your loved ones, a provision in your will to leave a gift to Creighton Prep will give you a great deal of satisfaction, knowing that your future gift will help Prep students for generations to come. Gifts through wills are popular because they are both easy to arrange and can be changed at any time. Charitable bequests can include cash, securities, real estate, or other property, and may be identified specifically, as a percentage of your entire estate, or that part of your estate that remains after making specific bequests.
Estate Tax Savings
Your charitable bequest, in any form, is free from Federal estate tax and may significantly reduce taxes assessed against your estate. This means that Prep will be able to use the full amount of the gift, where gifts to others may be substantially reduced by taxes imposed.
Choosing How Your Bequest Will Be Used
The choice is yours. You may allow the school to determine where the money is most needed (unrestricted bequest), or you may designate the purpose (restricted bequest) choosing to support such ongoing needs as tuition assistance, faculty development, athletics, or building and maintaining facilities.
- Income-Producing Gifts
Gift with a Variable Income
A Charitable Remainder Unitrust is one in which the income from the trust varies with the value of the assets held in the trust. The account is revalued once a year and the amount of the payments changes based upon that re-valuation. As the value of the unitrust assets grows, the income paid to you or others you select increases proportionately. However, if the value of the assets declines, the amount of income will decrease also. You can add to this type of trust at a later date.
A Charitable Remainder Annuity Trust is very much like the unitrust, except that with the annuity trust you receive a fixed income each year. The dollar amount of the income is set as a percentage of the amount originally placed in the trust. The advantage of this plan is that your annual income is fixed for the term of the trust and does not vary with the value of the assets held in trust. No additions may be made to annuity trusts.
Gift with a Fixed Income
Creating an Income-Producing Gift
You can make such a gift to Creighton Prep by irrevocably transferring securities, cash or other property to the school (or other qualified party) as the trustee. The trustee then manages the investment and pays an income to you, your spouse, and/or other beneficiaries. The income payments continue for the beneficiary's life, or for a period of years. Thereafter, the remaining trust principal goes to Creighton Prep, to support a program that you may choose.
Tax and other advantages of Income-Producing Gifts
Because the school's investment team will manage the assets, your gift to Creighton Prep will be supporting the mission of the school for generations to come. You may receive significant tax advantages, such as an immediate charitable income tax deduction, an avoidance of immediate capital gains taxes upon sale of appreciated assets, and eventual estate tax savings.
Note: Any of these techniques needs to be carefully considered with your tax advisor and your attorney. These types of trusts can be created during lifetime or upon your death.
- Retirement Accounts
Often retirement funds are accumulated that neither you nor your family will ever use. For such an occurrence you may want to name Creighton Prep as the final (or contingent) beneficiary of a qualified retirement account, causing the funds in that account to be distributed directly to school upon your death. This gift will not be reduced by estate taxes or by income taxes, and will support the school's mission. Your employer or retirement account manager can easily help you add or change beneficiaries.
Such an estate gift of a retirement account can benefit both you and your heirs. You will retain full control of the funds while you are alive, should you want to use them; and you will avoid paying estate tax on those funds. Additionally, by leaving estate assets other than the retirement funds to your heirs, your heirs will not be required to pay income tax on the transfer of the retirement plan. This type of gift may be the best tax planning for those who want to make a charitable gift at death as it may avoid both income tax and estate tax.
- Other Planned Giving Opportunities
Many people use a revocable living trust to manage their assets while they live. The trust may also continue after death, distributing assets and managing them for loved ones.
You can also make gifts to Creighton with a living trust. You can arrange for a yearly charitable gift to Prep out of the earnings of the trust. And, upon your death, you may simply want to bequeath all or part of the remaining assets in the trust as a charitable gift to the school as well.
Charitable Lead Trusts
The Charitable Lead Trust is essentially the opposite of the remainder trusts. Instead of you, the donor, receiving income back from a trust, in a lead trust, the school receives the income interest for a specified number of years. At the end of the trust, the remaining principal is returned to the donor or, more commonly, another family member. The income that is paid to Prep may be either a fixed amount (an annuity trust) or a fixed percentage of the annual value of the trust (a unitrust). At the time the trust begins, you or your estate may receive a charitable gift or estate tax deduction for the percentage payable to Creighton Prep.
A lead trust can be especially valuable in estate planning, because although income tax benefits of such a trust are often minimal, the estate and gift tax savings may be significant. Therefore, a charitable lead trust is often set up to begin upon the death of the donor. It may have extra value to family members when the assets are likely to appreciate substantially in value over the life of the trust.
A Charitable Lead Trust needs to be carefully considered with your tax advisor and your attorney.
Quite often people find that they have more life insurance than they really need. For example, their children may be grown and life insurance that was intended to provide education funds is no longer needed. A gift of a life insurance policy, one that is paid up or one with premiums still due, makes a very good charitable gift. And the gift can easily be made by naming Creighton Prep as both the beneficiary and owner of the policy. Normally, your charitable deduction will be approximately the cash value of the insurance policy at the time of the gift. You may even want to purchase a new policy to give to the school.
Appreciated real estate may be one of the best gifts that can be made to Prep. Often, however, your return from the property is small and operating costs, such as taxes and maintenance, continue to rise. Should you sell the appreciated real estate, you will have to pay capital gains tax on the appreciated amount, considerably reducing your net gain from the sale. If, however, you make a gift of the real estate to Prep you can avoid the income tax on the capital gain. This gift can be made directly to Prep or through a Charitable Remainder Unitrust or a Charitable Remainder Annuity Trust.