Gifts That Pay You Income
Life-income gifts can be a wonderful way to give to Millikin while getting a benefit for yourself and your loved ones, as well. Life-income gifts can provide you with a reliable stream of income, while offering significant tax savings and making a meaningful future gift to Millikin.
Millikin has benefitted from the generosity of donors who have created charitable gift annuities and charitable remainder trusts. Read on for more information about these life-income gifts.
We strongly advise donors considering this type of gift plan to first consult with their attorney and/or financial advisor for additional information.
A charitable remainder unitrust is a tax-exempt, irrevocable trust designed to reduce the donor's taxable income by paying the donor (or another beneficiary) an annual amount of interest based on the principal of the trust, which is revalued annually. This amount is paid for the lifetime of the donor or beneficiary, or for a fixed term of no more than 20 years. Additional assets can be placed in the trust. When the trust ends, the remaining assets-the "charitable remainder"-are distributed to Millikin. You receive an income-tax deduction for the charitable remainder value of the trust, and are not subject to capital-gain taxes if the trust was funded with appreciated assets.
Example: Joanna Smith, age 65, owns several shares of stock worth $100,000, which she purchased many years ago for $10,000. She would like to sell the stock, but doesn't want to pay the steep capital gain tax on the sale. By working with her financial advisor and attorney, Joanna transfers the stock into a unitrust paying an annual amount of 5%. She will receive 5% of the fair market value of the trusts assets, revalued each year, for her lifetime. This amount is significantly more than the dividends she was paid for the stock, and she also completely avoids paying the capital gains tax that would have been levied had she sold the stock. After Joanna's lifetime, Millikin will receive the remaining trust assets.
A charitable remainder annuity trust is similar to a unitrust in how it is established; however, rather than paying the beneficiaries a percentage of the trust assets as revalued annually, the annuity trust provides payment to you or a beneficiary in a fixed amount based on the value of the trust when it is established. The amount must be at least 5%, but no more than 50%, of the initial fair-market value of the trust.
Unlike a unitrust, additional assets cannot be placed in an annuity trust. Benefits include a tax deduction for the charitable remainder value of the trust. You may also avoid paying capital gain taxes if the trust is funded with appreciated property.
The charitable gift annuity is one of the most popular ways to make a meaningful gift to Millikin, while still retaining a benefit for yourself. This gift option is very popular with donors who are mindful of their need to retain a stream of income for their retirement years. Here's how it works: in exchange for making a gift to Millikin, you receive guaranteed interest payments for your lifetime. Payment rates are based on age, and a portion of your gift is tax-deductible. At the end of your lifetime, your gift is designated to Millikin, in the area of your choice. Contact the Alumni and Development Office to learn more about this gift option, and to obtain a personalized gift illustration.*
*Please note, this gift option is subject to certain restrictions, including restrictions with regard to age and the amount of donation.
Example: Ron is a 75 year-old Millikin alum who wishes to make a gift to Millikin. He is on a fixed retirement income. He decides to create a charitable gift annuity worth $15,000 with Millikin, to support the Millikin Fund. At his age, the interest rate he will be paid is 6.2%. His total annuity benefit is $930 per year, which is paid on a quarterly basis. Ron is guaranteed this amount for his lifetime. The remainder of his gift will be used to benefit the Millikin Fund, per his wishes.