A well-planned will is the cornerstone of nearly every estate plan. A bequest is an instrument of your will that sets aside a sum of money or a portion of the estate for distribution to a charitable organization. You, the donor, can assign the bequest without any qualifications, or it can be designated or restricted for use to a program of interest to you.

A living trust provides for you and your family before and after death. It has built-in flexibility that can work well with overall estate plans because it allows you to retain control of assets for as long as possible. Like wills, living trusts are fully revocable and can be changed or terminated at any time during your life. However, the terms of a living trust can be put into effect immediately. A living trust can be used to make a contribution to Davenport by naming the Davenport University Foundation as the ultimate beneficiary. And you still have complete control of your assets during your lifetime.

A common vehicle of estate planning is a gift in the form of life insurance. As the donor, you transfer the ownership of your life insurance policy and name the Davenport University Foundation as the primary beneficiary. Because you transfer the ownership of the policy, your premium payments can be claimed as a charitable tax deduction as long as the policy remains in force. Another benefit is an eventual reduction in estate taxes because life insurance proceeds that would otherwise be subject to estate tax are now removed from the taxable estate.

Are you aware that retirement plan assets are facing double taxation? If assets are left to your beneficiaries, this action will generate what is called "income respect of a descendent." So not only is the amount diminished by estate taxes, but the recipient also must pay income taxes. By providing for a charitable gift of any remaining retirement plan assets of an estate at the time of death, you will avoid both income and estate taxes. At the same time, this provides greater flexibility in giving other assets to loved ones and heirs at less cost to your estate and to them. Donating retirement plan assets could be the most cost-effective gift you can make.

If you sell a primary residence, up to $250,000 of the gain can be excluded ($500,000 if you are married). This tax break, however, does not apply to other types of real estate. Donating real estate to Davenport will provide numerous advantages such as: an income tax charitable deduction for the full fair market value of the property; avoidance of capital gains tax that would be otherwise due; reduction of the taxable estate; and avoidance of a gift tax.

You can make a gift of a home or certain other real estate while retaining use of the property for as long as you live. Through the use of a life estate arrangement, you can make a gift of a personal residence or farm while retaining the security of knowing you may live there as long as you wish. The satisfaction of giving, as well as significant tax benefits, is enjoyed now rather than later.

You continue to take care of the property, pay the taxes, and even receive any income it generates. Because you have already arranged for transfer of the property by deed, it does not pass through your probate estate at death, possibly saving unnecessary expenses and delays.

With a Charitable Remainder Unitrust, you irrevocably place money, stock, personal, or real property in a trust and receive income for life or for a period of years, as determined by you at the time the assets are transferred. You receive annual payments from the trust based on a fixed percentage selected by you and applied to the market value of the assets as determined each year. This means that the income will vary from year to year. This enables you to receive an income stream for life, perhaps greater than the previous yield from the assets placed in the trust. In most cases, a professional trustee is selected to manage the trust.

This trust is similar to the Charitable Remainder Unitrust, but with two important differences. The annual income you, the donor, receive as a result of the gift will always be the same regardless of the changing annual value of the assets, which results in no investment worries or responsibilities. The percentage selected by you applies to the original fair market value of the assets at the time the gift is made, and that amount will pertain for the lifetime-income period. Once assets are placed in a charitable remainder annuity trust, you cannot add to the trust capital to provide for a greater charitable deduction. In this situation, you seek financial security by expecting that a fixed amount of income will be paid annually regardless of market conditions. After your lifetime, and the lifetime of a surviving beneficiary if desired, the trust remainder is available to support Davenport University.

The lead trust differs from the unitrust or annuity trust in that the University receives the income from the trust during the trust period rather than receiving the remainder of the assets at the end of the trust period. Using this type of trust will reduce the estate or gift taxes that heirs will have to pay. The lead trust is a way to transfer property to children or other heirs at greatly reduced taxing levels. It is ideal if you are willing to give up investment income on an asset but do not want to force heirs to surrender the principle.

This annuity is an agreement between the donor and the University, which provides a gift to Davenport, provides you income for life, and generates a tax deduction. The gift annuity agreement is an uncomplicated way for many donors to make a gift to the University and still benefit by gaining relief from income and estate taxes.

Barbara A. Mieras, Ph.D.
Senior Vice President for Major Gifts
616.233.3413
866.248.0012
Fax: 616.233.3462
barbara.mieras@davenport.edu