How to Give

Not only do you have options for how your gift will be used, you also have options on what to give and how to give. There are gifts that cost you nothing now, gifts that pay you income, and gifts that allow you to decide what happens when.

 

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Gifts Through Trusts

Grantor Charitable Lead Trusts

A grantor charitable lead trust allows you to give an annual income to Union College, receive a charitable income tax deduction, and retain the trust principal when the trust's term ends.

Charitable Remainder Unitrusts

A charitable remainder unitrust allows you to donate cash or appreciated assets and receive annual payments as a fixed percentage of the trusts value. When the value of the trust increases, so do your payments and your gift to Union College. Your donation qualifies for an immediate tax deduction, and the assets in the trust are exempt from capital gains taxes.

A charitable remainder unitrust (CRT) is a separately invested and managed charitable trust that pays a percentage of its principal, re-valued annually, to you and/or other income beneficiaries you name for life or a term of years (up to a maximum of 20). You receive a charitable income tax deduction for a portion of the value of the assets you place in the trust. After the trust terminates, the balance is transferred to Union College to be used as you designate. A unitrust provides the most flexibility of the life income gift options.

Is a CRT right for you?

A charitable reminder unitrust could be the right life income gift if you.

  • would like to make a significant gift to Union College while retaining or increasing your income,
  • hold appreciated property, such as securities, a closely-held business, real estate or partnership interests, and would like to avoid capital gains tax associated with a sale,
  • want the opportunity for your income to grow over time, and,
  • desire maximum flexibility in your gift, including choosing the person who administers your gift, guiding its investments, and choosing your payment percentage (5%-6% is typical).

How does it work?

  • Union College provides you and your attorney with a draft trust instrument.
  • You irrevocably transfer cash, securities, or other property to fund the trust.
  • You receive an income tax deduction and pay no capital gains tax on the transfer.
  • During its term, the trust pays a percentage of its value each year to you and/or other beneficiaries you have named.
  • When the trust ends, its remaining principal is transferred to Union College.

What are the tax benefits?

  • You will receive a federal income tax deduction for a portion of your gift.
  • You will avoid all upfront capital gains tax on any appreciated assets you transfer to the unitrust.
  • You may reduce your estate tax liability by removing a large taxable asset from your estate.

I don't need the income right now, do I have other options?

Yes! A "Retirement Unitrust" defers income payments until a future date when the income switch "flips" on. Until that pre-determined time, the trust pays net income only. If no net income is produced, the trust pays nothing. Once the "flip" event occurs, the trust converts to a standard unitrust that pays a defined percentage of the fair market value of the assets to the beneficiaries beginning at the next valuation date. This flexible feature allows the trust to defer income payments until the sale of an illiquid asset, such as real estate, or to build up principal value on a tax-deferred basis until you retire.


Flip Unirusts

A flip unitrust allows you to donate illiquid assets like business interests or assets earning little or no income like real estate to receive an immediate tax deduction, and allow the value of those assets to appreciate in the trust tax free. When they are sold, the trust 'flips' to a conventional charitable remainder unitrust and income payments to the beneficiary begin.

Family Trust

A family trust is also called a charitable lead trust because the charity takes the 'lead' in receiving income for a period of time with the remaining assets going to the donor's family when the term of the trust expires. The donor receives an immediate tax deduction for their gift, and the assets that pass to the family.

The charitable lead trust (CLT) pays income to Union College now, while reducing your tax costs for transferring assets to your heirs. With a charitable lead trust, you irrevocably transfer assets to a trustee and provide that payments will be made to Union College for a certain number of years or until the end of your or another's life. Then the principal is passed along to your children or other heirs at greatly reduced gift and estate tax rates and in some instances, avoid them all together. The charitable lead trust may appeal to individuals who wish to make a gift while retaining property in their family.

Is a CLT right for you? ?

A charitable lead trust could be the right life income gift if you.

  • have substantial assets which are not needed for your own financial security,
  • would like to provide for your family or other heirs,
  • want to reduce your gift and estate taxes, and probate costs,
  • have as your planning objective to preserve the value of your estate, not increase your income or reduce your income tax, and,
  • would like your gift to provide a stream of income to Union College , meaning your gift will make a difference starting immediately.

How does it work?

  • You irrevocably transfer cash, securities, or other property to a trust. At the time of your gift you received a charitable tax deduction.
  • Each year, during its term, the trust pays a percentage of its value or a fixed amount to Union College .
  • When the trust ends, its remaining principal transfers to your family or other heirs you name.

What are the tax benefits?

  • You make a substantial annual gift to Union College .
  • You are not taxed on the annual income generated, but you also do not receive an income tax deduction each year. (It is possible to get an income tax deduction up front. Please speak with us for more information.)
  • You pass remaining principal to your heirs at greatly reduced gift and estate taxes.
  • You benefit from professional management of the assets during the term of the trust.
  • You enjoy a gift tax deduction for the present value of Union College 's income interest.

Specific tax implications of a CLT of which you should be aware.

When you transfer assets to your charitable lead trust, you are making a taxable gift to the individuals who will receive your trust's principal when it ends. However, your gift of payments to Union College earns you a charitable gift tax deduction in the year of your gift that will reduce your taxable gift. In addition, the assets in your charitable lead trust are removed from your taxable estate. This means that any growth in the value of your trust's assets during its term can be passed on to your heirs completely free of taxes.

A charitable lead trust is a taxable trust, but it pays income tax only if its income exceeds the amount it pays to Union College during the year. A careful trustee can balance your lead trust's income against its charitable payments in order to minimize its income taxes.