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Charitable Gift Annuities and Charitable Remainder Trusts

Charitable Gift Annuity
Creative charitable planning can convert appreciated securities into a source of lifetime income while minimizing or eliminating capital gains tax. A charitable gift annuity is a contract between you and the Fayetteville State University Foundation, Inc. You transfer an irrevocable gift of cash or appreciated securities to the Foundation in exchange for quarterly or annual payments--with payout based upon your age at the time of the gift and other factors. This planned giving arrangement provides numerous tax advantages, with a portion of the gift qualifying for a tax deduction. It also provides a way for you to pledge an enduring gift to FSU when the remainder becomes available for our needs.

There are generous income tax advantages with funding a gift annuity with appreciated stocks. If you own highly appreciated stocks yielding little dividends, a charitable gift annuity is an excellent way to move these assets into a financial plan that guarantees income for you at an attractive fixed rate for life. You will also avoid much of the capital gains tax that applies if you were to sell the stock and you can spread the capital gains tax you do incur over the life of the annuity.

  • Example: Juanda Bronco is a 70-year-old graduate. She has assets of $500,000 in assets. She would like to make a gift to the FSU Foundation.  She gives the Foundation $50,000 in securities, for which she paid $20,000, in exchange for a charitable gift annuity to establish an education scholarship. The annuity yields the following: 1) annual income of 7.3% or $3650 for life; 2) annual tax free income for 15.9 years of $699; 3) prorated capital gains for 15.9 years; 4) ordinary income of $1092 for 15.9 years. Please consult with your attorney or accountant on how this general information relates to your specific financial and estate planning situation. The Office of Institutional Advancement is pleased to provide you or your advisors with more detailed information.

Advantages
Guaranteed income for life
Generous tax breaks

Charitable Remainder Trust (CRT)
The charitable remainder trust has a charitable beneficiary or beneficiaries. You make an irrevocable gift of cash or appreciated securities and specify how trust income and principal are to be distributed. The CRT allows for the selection of the trustee who will oversee investment of the funds. The trust may be created to become effective during life or at death.
There are two types of charitable remainder trusts: the charitable remainder annuity trust and the charitable remainder unitrust. A charitable remainder annuity trust pays a fixed dollar amount, determined at the funding of the trust, to the income beneficiaries. A charitable remainder unitrust pays a fixed percentage of the trust annually to the income beneficiaries. The dollar amount goes up or down each year depending on the trust’s performance. Assets can be added to a unitrust at a later time.

  • Example: Jessie, age 60, contributes $100,000 in cash to a unitrust, arranging to receive 7% of the fair market value of the unitrust assets each year, payable quarterly. The first year, he is entitled to $7000 (7% of $100,000). Each subsequent year, the same process is followed. As the value of his trust increases or decreases, so do his income payments.
    Please consult with your attorney or accountant on how this general information relates to your specific financial and estate planning situation. The Office of Institutional Advancement is pleased to provide you or your advisors with more detailed information.

Advantages
Professional management by FSU
Income for life at a fixed percentage

To discuss a charitable gift, please email or call Mary Bailey at 910-672-1729.

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