Bequests and Other Testamentary Gifts
Gifts that come to Anderson University at the end of your life are said to be "testamentary" gifts. Perhaps the first of this type of gift to come to mind is a bequest in a will. However, there are several other ways to provide generous gifts that will come to Anderson University at the end of your life. These include:
| Benefit to AU: | AU will receive a sizable gift. |
| Benefit to Donor: | The donor continues to have use of the financial resource during his/her lifetime. The donor has a good feeling knowing he/she has left a sizable gift to support AU students in the future. |
| Examples: | Wills and Bequests
Life Insurance Gifts of Retirement Plan Benefits |
Through your will, you can provide for funds to come to Anderson University for programs or purposes that are important to you. Bequests can take various forms. The following samples of several types of bequests are included for your advisor's consideration in preparing your will.
General Bequest:
A general bequest is one of the most popular ways to make a charitable gift by will. You simply leave a specified dollar amount to Anderson University.
- Example: I give (DOLLAR AMOUNT) to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University, to be used for its exempt purposes.
Specific Bequest:
A specific bequest is another popular type of charitable bequest. With this bequest, you designate that Anderson University is to receive a specific asset.
- Example: I give (DESCRIPTION OF PROPERTY) to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University, to be used for its exempt purposes.
Residuary Bequest:
A residuary bequest is used to give Anderson University all (or a portion) of an estate owner's property after all debts, taxes, expenses, and all other bequests have been paid.
- Example: I give the rest of the property I own at my death to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University, to be used for its exempt purposes.
Percentage Bequest:
A bequest can be expressed as a percentage of the estate or of the residual estate.
- Example: I give (THE DESIRED PERCENTAGE) of my estate to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University, to be used for its exempt purposes.
Contingent Bequest:
When writing your will, it is important to plan for the situation in which the beneficiary of a bequest dies before you or disclaims the property. In anticipation of such an occurrence, you may name Anderson University as the alternate or contingent beneficiary. This will ensure that the property will pass to Anderson University rather than to unintended beneficiaries.
- Example: If (NAME OF BENEFICIARY) predeceases me or disclaims any interest in (DESCRIPTION OF PROPERTY), I give such property to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University, to be used for its exempt purposes.
Restricted Bequest:
The samples of bequest provisions suggested above are designed to provide unrestricted gifts. However, you may prefer to restrict your bequest for a specific purpose. For example, if you wish to memorialize a family member or an honored colleague, you can establish a named fund that will provide support for a program in which you (or the honored person) are particularly interested.
A restricted bequest usually should be made in the broadest terms possible consistent with your interests. This guards against the possibility of the purpose of your gift becoming obsolete.
- Example: I give (DOLLAR AMOUNT) to Anderson University, Inc., an Indiana not-for-profit corporation doing business in the City of Anderson, Indiana, in the name and style of Anderson University. This gift shall be held as a permanent endowment to be known as the (NAME) Endowed Fund, only the distributions on which shall be used to support the (EXEMPT PURPOSE FOR WHICH THE GIFT IS TO BE USED ) . (LANGUAGE SIMILAR TO THE FOLLOWING IS SUGGESTED TO ENSURE FUNDS WILL BE USED IN CASE IT BECOMES IMPOSSIBLE OR IMPRACTICAL TO USE THE FUNDS AS ORIGINALLY STATED.) If the president of Anderson University, Inc., determines that it is not feasible or economical to use the distributions for the purpose stated above, the distributions may be used for such exempt purposes of Anderson University, Inc., as the president directs.
Essentially, trusts can contain provisions that dispose of your assets much the same as a will. A trust can contain a provision for Anderson University much like your will and can address the same purposes.
Many of our friends have named Anderson University a beneficiary of their life insurance policies. This is a wonderful way to make a substantial provision for Anderson University without parting with significant assets currently. Of course, this will not generate a current income tax deduction but any policy proceeds paid to Anderson University will be deductible for estate tax purposes.
Other ways you can use a life insurance policy in your charitable planning
In addition to naming the university a beneficiary of a policy, you also can use life insurance in other charitable planning. For example, you could:
- Give Anderson University a "paid up" policy. People often buy life insurance to protect against a certain contingency, such as dying before children have finished college. Many times, when the original need for the insurance has passed, some of our friends find such a policy an excellent asset to give. You get a substantial deduction roughly equal to the policy's cash value that saves income taxes without diminishing your current cash flow.
- Purchase life insurance to "replace" assets you give to Anderson University. Depending on your age and your health, you may be able to use the tax savings from a gift to Anderson University to purchase life insurance equal to or greater than the value of the assets you gave. This, in effect, replaces the value of the asset in your estate to pass on to other beneficiaries. We would be happy to discuss with you how this plan can even increase current income and reduce gift and estate taxes.
Gifts of Retirement Plan Benefits
Did you know that estate and income taxes
can eat up a lot of the value of
retirement and pension plan
gifts left to beneficiaries?
Gifts of retirement or pension plans after one's death are great ways of supporting AU while minimizing the impact of taxes on your estate or beneficiaries.
With many qualified retirement plans you can designate where any remaining benefits go at your death. If you plan to make charitable gifts at your death, this kind of retirement plan benefits is an excellent choice to fund your gift.Why is the gift of a retirement plan or pension plan to AU an excellent choice for both you and the university?
Contributions to such plans usually are made on a tax-deductible basis and grow in the plan usually is on a tax-deferred basis. This means that neither the contribution nor the growth has ever been subject to income tax. Tax law provides that the benefits are taxable income to whomever receives them.Because Anderson University is tax-exempt, we do not have to pay any income tax on the benefits. If you leave the benefits to your family and leave other property to Anderson University, your family members would have to pay income tax - in addition to any estate tax generated by the benefits.
Estate and income taxes can eat up a lot of the value of retirement plan benefits. With creative charitable planning there are even ways to avoid the income tax and produce a source of lifetime income for your beneficiaries. We would welcome the opportunity to discuss these strategies with you.
