Outright Gifts to Boston University School of Medicine can be used to support programs specified by the donor. Gifts of highly appreciated assets, such as securities or real estate, offer special advantages since the portion of the fair market value that represents increase in value is genenrally not subject to capital gains tax.
Make a Stock Gift
Gifts That Provide Income and Other Financial Benefits
Planned gifts and bequests offer the donor income and tax advantages and often make possible a far larger gift.
In typical planned gifts, donors transfer assets to the School of Medicine; they and/or others receive income payments for life or a period of years and charitable deductions and other tax benefits. Donors may choose a fixed or variable income stream. In all instances, the donor should consult a financial or legal advisor before completing the gift.
Charitable Gift Annuities
Charitable gift annuities can augment the financial and estate plans of donors, especially retirees. Under the terms of a gift annuity, a donor transfers assets to the School of Medicine and then receives fixed payments for life and/or the life of another.
Minimum gift: $10,000
Deferred Gift Annuities
Donors of deferred gift annuities contribute cash or appreciated securities and receive annuity payments beginning at a future time if they choose. The minimum age to contribute to a deferred gift annuity is 55. The annuity rate is based on how long payments are postponed, the age of the annuitant when payments begin, and other factors. The donor receives a larger charitable income-tax deduction because of the deferral.
Minimum gift: $10,000
Charitable Remainder Trusts
Charitable remainder trusts offer flexible giving opportunities for those who wish to provide significant future funding for the School. The donor transfers cash or appreciated assets to a trust, which provides payments for the lifetime of one or more persons or for a term of years. At the time designated by the donor, funds remaining in the trust are transferred to Boston University School of Medicine to benenfit the program of the donor’s choice. Charitable remainder trusts can be designated to provide variable or fixed payments, while offering donors several tax and payment benefits.
Donor’s who prefer a fixed income may choose a charitable remainder annuity trust. The annual payment amount (at least five percent) for the duration of the trust is agreed upon when the trust is created.
Donors may also select variable payments that fluctuate with the growth and earnings of the trust assets. The charitable remainder unitrust offers annual payments equal to a percentage of the value of trust assets as determined each year. The percentage (at least five percent) is determined by the donor when the trust is created.
Through a charitable remainder trust, donors can realize their philanthropic dreams while responding to immediate financial concerns. Payments from a charitable remainder trust can supplement retirement income, help defray the educational expenses for a grandchild or other family member, or augment the income of an older relative.
In all instances, a remainder trust provides income to the donor or another income beneficiary for life or for another permissible period and a charitable tax deduction in the year of the gift; generally a remainder trust reduces estate taxes. When appreciated assets are contributed, no capital gains tax is due on the appreciation portion of the fair market value. Because no capital gains tax liability is incurred, funding a charitable remainder trust with highly appreciated real estate is especially advantageous. Payments from a charitable remainder trust may also incur relatively low taxes.
Minimum gift: $100,000
Charitable Lead Trusts
For donors with extensive assets, including those who would like to preserve closely held businesses for the next genenration, a charitable lead trust may provide particularly appealing gift and estate tax benenfits. During the term of the trust, payments, either fixed or variable, are made to Boston University School of Medicine. At the end of the period, the assets in the trust are transferred to the donor’s heirs.
Minimum gift: $100,000
A bequest by will, revocable living trust, or similar plan allows a donor to give to the School without affecting the donor’s financial security. Assets from an estate can pass under will or trust to the School in the following ways:
- The donor directs that a specific dollar amount shall pass to the School. With this option, donors know exactly what sum will be applied to the program of their choice.
- The donor specifies that a percentage of the value of the estate shall pass to the School.
- The donor bequeaths a specific item or asset to the School. Leaving tax-burdened assets, such as U.S. savings bonds, can save both income taxes and “death taxes.” Prior consultation will ensure that the asset will fit the School’s long-term plan.
Provisions for family members should, of course, come first in a donor’s estate plans. To ensure that an estate properly provides for relatives, a donor may opt to name the School as a beneficiary of all or a portion of the residue of the estate.
A donor should always consult an attorney when drawing up a will or other long-range financial plans, as tax and other laws vary from state to state and change frequently.
Retirement plans, including IRAs, 401(k) plans, Keogh Plans, and others, can provide excellent “pockets” from which to make charitable gifts. Many people are surprised to learn that heirs will receive relatively little of the balance in such plans after estate, income, and other taxes are deducted. Donors should check with financial advisors to learn more about making current and future gifts utilizing retirement assets in tax-favored ways.
Almost any arrangement that provides for a death beneficiary can be made payable to Boston University School of Medicine. For example, a donor can make the School the beneficiary of commercial annuities or deferred compensation and save both income taxes and estate taxes. Other ideas include:
- Financial Accounts
People who have financial accounts at banks, savings and loan associations and credit unions generally may direct that their deposits (checking, savings, share accounts, certificates of deposit) be paid on death to a particular individual – or to the School. The designation can be revoked any time prior to death and in no way affects the depositor’s control over funds in the account. Donors should consult the managers of their accounts.
- Brokerage Accounts
If a donor has stocks, bonds, or mutual fund shares in brokerage accounts, it is possible to name Boston University School of Medicine as “TOD” (transfer on death) beneficiary. In such instances, donors maintain full control over the account during their lifetime.
- Life Insurance
One of the easiest and most cost-effective ways for donors to include Boston University School of Medicine in their estate plans is through life insurance. For example, a donor might name Boston University School of Medicine the beneficiary or alternative beneficiary of an old policy that is no longer needed for family security. Some special circumstances may apply. Simply ask the insurance company for the forms necessary to change the beneficiary or to transfer ownership in the policy to Boston University School of Medicine.
- Revocable Living Trusts
Many people who have living trusts do not realize that it is also possible to make gifts to the School through these trusts. During the life of the donor, the trustee can be directed to pay a portion of the trust income to the School each year, giving the donor a charitable income tax deduction. A gift to the School at the donor’s death entitles the donor’s estate to a charitable deduction.
Using any of the plans described above, the donors can endow significant gifts to Boston University School of Medicine and forever link their names with a program, professorship or scholarship. The minimum amounts required to endow particular programs are as follows:
|Career Development Professorship:||$1,250,000|
|Full Tuition Scholarship:||$1,000,000|
Choosing the Best Asset to Give
A donor may consider funding a planned gift with the following assets:
Cash is often the most convenient asset to transfer. Cash gifts are deductible in the year of the gift up to 50 percent of the donor’s adjusted gross income. Any excess can be carried forward, if necessary, for up to five future tax years.
Alumni receiving honoraria may ask the organization giving the honoraria to give it directly to BUSM in their name as their donation. This option offers alumni a more tax efficient way to donate.
Another source of support for our medical school can come from the donations of grateful patients in honor of their physicians.
Should you have a patient who would like to honor you by making a donation to your medical school in your name, it would be a fitting tribute.
Owners of highly appreciated securities may be reluctant to sell and pay capital gains tax on the appreciation portion of the fair market value. Funding a charitable remainder trust with securities can avoid capital gains tax liability at the time of the gift. The full value of the gift is available to the School to invest for the donor.
A current or deferred charitable gift annuity also may be funded with appreciated securities. Capital gains tax on a portion of the appreciation is realized but reported gradually, over the actuarial life span of the donor. As with all gifts of appreciated property, the donor may claim a charitable income tax deduction in the year of the gift, subject to a limit equal to 30 percent of adjusted gross income. As with gifts of cash, unused deductions may be carried forward up to five future tax years.
Real Estate may appreciate more than other assets while yielding little income. A gift of real estate offering special benefits to both the donor and the School can be accomplished in several ways.
- Outright Gifts of Real Estate
An outright gift of appreciated real estate results in a charitable tax deduction to the donor based on the fair market value of the property.
- Gifts of Real Estate to Provide Income
Funding a charitable remainder trust with a gift of real estate can provide a donor or designated beneficiary income for life or another period. As with gifts of other appreciated assets, the donor avoids capital gains tax on the increase in value of the real estate at the time the gift is funded.
- Gifts of Real Estate with Retained Life Estate
A donor may give the School a farm, principle residence, or vacation home and retain use of the property for life. The donor receives a charitable tax deduction equal to a portion of the value of the property in the year of the gift and retains rights and duties of ownership.
Life insurance ownership, stock in closely held businesses, and certain personal property, such as artwork, antiques, and jewelry also can be given to the School of Medicine. Special considerations apply to each category.
In the instance of life insurance, for example, the donor transfers ownership to the School and names it as the primary beneficiary. If the policy is not paid up, the donor makes annual contributions equal to the premium amount and is credited with deductible gifts of cash to the School, which then pays the premium.
Stock in a closely held corporation can be used as a funding asset. An expert appraisal will establish the fair market value of the stock for gifts in excess of $10,000.
A life income gift can be funded with tangible personal property, such as furniture, books, automobiles, jewelry, paintings, and antiques. The donor’s charitable income tax deduction typically will be limited to the amount paid for the object, or the fair market value, whichever is less. When such property is used to fund a charitable trust, capital gains tax is bypassed at the time of funding the gift, and payments will be based on the full value of the property.