Looking for ways to give Mount St. Mary’s College a significant gift? If you have built up a sizeable estate, you may want to check out the advantages of setting up a charitable trust. There are several types of trust—the options allow you to tailor your gift to meet your personal, charitable and financial goals.
The charitable remainder annuity trust and charitable remainder unitrust let you or other named individuals receive income each year for life or a term of years from assets you give to the trust. After the life of the named individuals or the set period of years, the balance in the trust goes to the charities of your choice.
The charitable lead trust can make payments in one of two ways. A charitable lead annuity trust pays a fixed amount each year to our organization and is more attractive when interest rates are low. A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust.
Roger and Theresa own $500,000 in stock that is worth 10 times today what they paid for it a decade ago. Roger and Theresa had considered selling the stock, but did not like the idea of paying capital gains tax. Instead, they saw a smart way to help themselves and Mount St. Mary’s College at the same time. They transferred all of the stock to a tax-exempt charitable remainder annuity trust and received an immediate federal income tax charitable deduction. The trust sold the stock and invested the proceeds. Because the trust is tax-exempt, it does not have to pay taxes on the $450,000 capital gain Roger and Theresa earned from the stock. The trust is set up to pay Roger and Theresa a fixed amount of $25,000 for 20 years (5 percent of the initial donation). At the end of the 20-year term, the remaining assets in the trust will pass to Mount St. Mary’s College to support our mission.
Learn How to Fund It
You can use the following assets to fund a charitable trust:
A charitable bequest is one or two sentences in your will or living trust that leave to MSMC a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.
an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan
“I, [name], of [city, state ZIP], give, devise and bequeath to Mount St. Mary’s College [written amount or percentage of the estate or description of property] for its unrestricted use and purpose.”
able to be changed or cancelled
A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.
cannot be changed or cancelled
tax on gifts generally paid by the person making the gift rather than the recipient
the original value of an asset, such as stock, before its appreciation or depreciation
the growth in value of an asset like stock or real estate since the original purchase
the price a willing buyer and willing seller can agree on
The person receiving the gift annuity payments.
the part of an estate left after debts, taxes and specific bequests have been paid
a written and properly witnessed legal change to a will
the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will
A donor-advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much money (and how often) you want to distribute money from that fund to MSMC or other charities. You cannot direct the gifts.
An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.
Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.
Securities, real estate, or any other property having a fair market value greater than its original purchase price.
Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.
You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the gift tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.
You fund this type of trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to MSMC as a lump sum.
You fund this trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to MSMC as a lump sum.
A beneficiary designation clearly identifies how specific assets will be distributed after your death.
A charitable gift annuity involves a simple contract between you and MSMC where you agree to make a gift to MSMC and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.
To avoid the administrative hassles of selling real estate during your lifetime, give it to us through a bequest.
A portion of the distributions from commercial annuities is subject to income tax for non-charitable beneficiaries. Naming MSMC as a beneficiary of all or a portion of your commercial annuity will allow us to receive the assets you designate to us completely tax-free.
The full value of your IRA, 401(k), 403(b) or other qualified plans is subject to federal and state estate taxes at your death and the distributions from these accounts are subject to federal and applicable state income taxes. Instead, consider naming MSMC as a beneficiary of all or a portion of your plan.