Planned giving is one of the most powerful philanthropic tools available to School of Law benefactors. It offers ways to help you achieve your philanthropic goals for USD while benefiting yourself and your family. With careful planning, you can realize important tax savings, provide a lifetime income for yourself or a loved one and achieve other estate planning goals. We can work with you and your professional advisers to structure a planned gift that best suits your individual circumstances. Charitable gift annuities, charitable remainder trusts, charitable lead trusts, real estate, life insurance and bequests are examples of the most common types of planned gifts.
This is a simple contract between a donor(s) and USD whereby the donor gives an asset and in exchange for the asset USD pays the donor(s) a guaranteed, fixed income for life. The amount of the payment is based upon the value of the asset and the ages to nearest birthday of one or two annuitants (usually, but not always, the donor and spouse). For example, a couple who are 65 and 63 would be entitled to an annuity rate of 5.6 percent. If they were 75 and 70 when making the gift, the rate would be 6.1 percent. The payments from gift annuities can be partially tax-free for a number of years depending on the asset that is given for the gift annuity.
Gift annuities can be written to provide payments to the donor immediately or payments can be deferred, beginning at a future time. Deferred payment gift annuities will offer a higher payment depending on the length of the deferral.
When the surviving annuitant passes away, the amount remaining from the original asset will be used by USD in accordance with the donor’s wish.
Charitable gift annuities are regulated by the California Department of Insurance. Payments are a general obligation of USD and backed by all university assets. They are extremely safe and secure.
The Charitable Remainder Trust is best suited for assets that are highly appreciated, with a low basis that will suffer significant capital gain tax liability if sold by the owner/donor. The asset may also have a low yield.
There are two types of Charitable Remainder Trusts - the Unitrust, which pays a variable stream of income, and the Annuity Trust, which pays a fixed dollar amount. When the Trust terminates, the principal goes to the School of Law for the purpose named in the Trust instrument.
The Charitable Remainder Trust is recommended by estate planners as a vehicle to receive testamentary transfers of remaining assets in qualified retirement plans, such as IRA, 401(k), profit sharing and Keogh plans. This technique is suggested as a means for escaping an income tax liability to the estate ("income in respect of decedent"). The Trust also provides a charitable deduction to the estate for estate tax purposes.
A mirror image of the Charitable Remainder Trust is the Charitable Lead Trust.
The Lead Trust typically distributes a stream of income to the School of Law for a term of years, after which the trust principal goes to others, usually your heirs. If properly drafted, the Lead Trust will substantially reduce gift and estate taxes by means of a charitable deduction that is based on the income stream coming to the School of Law. This is probably the most cost-effective method of transferring property to your children or grandchildren.
For donors who are looking to retain use of a personal residence or farm, and who want to make a gift that maximizes their charitable deduction, this arrangement works very well. The donor simply deeds the property to the university and in the deed reserves the right to use the property (life estate). The personal residence can be either a primary residence or a vacation home. It helps if the property is debt-free.
The charitable deduction is based upon the appraised value of the property and the age(s) of the donor(s). Generally, it will equal 30-50 percent of the appraised value.
The donor(s) have the option of personally using the property or renting it to another party. The donor is entitled to all rents. The donor is also responsible for all expenses of maintaining the property (insurance, taxes, maintenance, etc.).
An additional option, under some circumstances, is to combine this gift with a gift annuity. The donor receives a guaranteed, fixed payment for life and has full use of the property, a so called “charitable reverse mortgage.” This option is typically best suited for couples or individuals in their mid to late 70s and older.
The children are grown and making their own living and from a financial standpoint that old life insurance policy doesn’t have the importance that it once did. It would make a very appropriate gift to the School of Law. There are two ways to accomplish this.
- Assign ownership of the policy to USD and receive a charitable deduction for the premium payments or cash value of the policy.
- Designate USD as the beneficiary of the policy. No deduction would be available because beneficiary designations are revocable.
Placing the School of Law in your will follows a time-honored tradition, and we would very much like to know of such benevolence. When considering a bequest, you may utilize the following sample language to include the School of Law in your estate plans:
“I hereby give (insert dollar amount, property to be given, percentage of the estate, or “the remainder of my estate”) to the University of San Diego, a non-for-profit corporation, located at 5998 Alcalá park, San Diego, California for the benefit of the School of Law.”
If you are planning a bequest for a specific or restricted purpose, you are strongly encouraged to consult with officials at the School of Law to assure that your objectives can be met.