Creating Your Legacy
Your planned gift should impact the university or other charity in a way that meets your vision. Your planned gift can provide unspecified support or target a specific need or program such as scholarships, faculty development or a specific discipline, college or department. You can make your gift available to be spent immediately or invest in an endowment fund that will support your goals in perpetuity. It’s up to you.
Some donors enjoy that their planned gift will create a permanent legacy in their name. Some wish their gift to create a permanent endowment that bears their name or name of a room or facility that their family and friends can visit and enjoy. We encourage this approach because recognizing you helps strengthen the growing tradition of giving at Cal State Northridge.
When you create your gift plan you can design in the degree of flexibility you wish to maintain. Some planned gifts are irrevocable because they involve an immediate transfer of assets and/or a firm pledge. Others may be revocable if your circumstances change or subject to modification by you such as a letter of intent to make a bequest.
The most popular and streamlined gift plan is a simple bequest created in your will or trust. Because it defers your gift, it allows you to retain complete control over your funds. Often, people don’t make large charitable gifts during their lifetimes simply because they want to be prepared for an unexpected emergency or may worry about outliving their assets. Bequests solve those problems.
Bequests may be very large, focusing an entire estate on one charity or may sprinkle donations among a number of beneficiaries.
Like bequests, other simple plans include naming the California State University, Northridge Foundation the beneficiary of your life insurance policy, commercial annuity, bank account or retirement account.
Some donors like to make a life income gift that will provide an income stream for a term of years or for one or more lives, while deferring the transfer of the remainder to charity well into the future. When a donor makes this kind of split interest gift, the tax deduction is based upon the value of the charitable remainder taking into account the planning choices you make.
A charitable remainder trust is a sophisticated life income gift plan which can provide you considerable planning choices. Within the framework of certain IRS rules you decide the payout rate, whether the payout will be a fixed dollar amount or a percentage of the trust’s fair market value, when the trust will sell the assets you contribute to it and other factors. You determine whether to fund your trust with cash, securities, real estate or personal property. When the trust sells the assets the sale is not immediately taxable. The income is not taxed until distributed to you or other income beneficiaries you name.
Another simpler strategy is a charitable gift annuity contract between you and your charity where you (and/or other beneficiaries you name) will receive a fixed income for life or a period of years. You can chose whether the income payments will begin immediately or be deferred to a future date. Deferred gift annuities have higher payout rates and higher charitable deductions. You can even have a flexible start date, where you trigger the start of income in the future when you need it. Charitable gift annuities are relatively easy to set up.
By making a gift of appreciated stock, other securities or real estate you may be able to deduct the fair market value of your gift and avoid having to pay taxes on the gain. This is a double benefit. Special rules apply to gifts of art and other personal property.
You may obtain significant benefits by funding a charitable remainder trust or charitable gift annuity with appreciated property.
You may also receive a substantial income tax deduction by transferring title to a home or farm to the Cal State Northridge Foundation while retaining a reserved life estate that allows you or others you name to live in your home for life or a term of years.
Some donors with large estates wish to reduce their gift or estate tax burden through charitable planning. Any outright gift – whether made during the donor’s lifetime or at death – removes assets from the donor’s estate and thus directly reduces the potential tax burdens.
Creating a charitable remainder trust or charitable gift annuity also reduces the estate by the value of the remainder interest that the charity will receive.
Another sophisticated tool is a charitable lead trust, which is the mirror of a charitable remainder trust. With a lead trust your charity will receive the income stream while your non-charitable beneficiary will receive the remainder. Lead trusts can often be used to transfer large sums to the next generation with minimal tax impact.
Many financial advisors consider IRAs and other retirement assets as the best assets to give to charity, because IRAs are taxable to your beneficiaries at their tax rate which may be higher than yours, while your charity will be able to keep 100% of any retirement assets you give.
Here are some additional considerations:You can make the Cal State Northridge Foundation the beneficiary of your retirement accounts, either by naming the foundation, or if the plan has certain restrictions, by naming your estate or trust and directing your executor or trustee to transfer those retirement funds to the foundation.
You can make your charitable remainder trust or charitable gift annuity the beneficiary of your IRA, to be funded at your passing.
Giving IRA assets during your lifetime can be complicated and may have some adverse tax impact. However, Congress recently passed a new provision available through 2008 that allows a tax-free charitable rollover from your IRA or similar retirement accounts to the Cal State Northridge Foundation or another charity by following some simple procedures, provided you are at least 70½ years old.
As you can see, some planned gifts involve an immediate transfer of funds and an immediate tax benefit to you while others defer the transfer of funds into the future for a term of years or to when the donor or other named beneficiaries pass away. We can help you to design the timing of your gift to meet your needs.