Planned Giving
Gifts that Provide Income to You
Gifts that Provide Income to You
The UMMS Foundation Life Income Gift program offers a variety of options for those who wish to make a significant gift to UMMS while continuing to enjoy an income for life.
Life income gift arrangements are established with irrevocable contributions of various assets including cash, appreciated securities, real estate or personal property. The UMMS Foundation invests the donated property to generate an annual income for you and/or another beneficiary for life or for a specified term of years. Upon the death of the last beneficiary or the end of the term, the proceeds of your gift are distributed to UMMS and used for the purposes you designate. Tax benefits differ depending on the type of assets given and the plan you choose but all of these arrangements provide the following benefits:
- Income for life to you and another person, such as your spouse;
- Increased income if the life income plan produces a higher yield than the assets you contribute;
- An immediate charitable income tax deduction for a portion of your gift;
- Elimination of capital gains tax when appreciated assets are contributed;
- Probable reduction of future estate taxes and probate cost; AND
- Personal satisfaction of helping UMMS to provide for the health of our community.
You may designate your gift to benefit a particular program, department or project that reflects your personal or professional interests. UMMS offers a variety of plans that can be designed to provide these benefits and are tailored to achieve your particular goals. Factors to consider when choosing the best plan for you include your age, the assets you wish to donate, your income needs and your financial objectives.
The Charitable Gift Annuity
Of all the life-income gifts, the charitable gift annuity is the simplest and most affordable. This is how it works:
In exchange for an irrevocable gift of cash or other property, UMMS will pay you and your spouse (or two individuals you choose) a fixed annual income (annuity) for life. Unlike a trust, you contribute your gift directly to the Medical System and the general assets of UMMS guarantee your annuity payments.
The annuity amount is determined at the time of the gift based on the ages of the beneficiaries you select. Annuity payments generally begin immediately but can be specified to commence at a later date.
The charitable gift annuity provides a number of distinctive tax benefits:
- The donor is entitled to a charitable income tax deduction in the year of the gift based on the difference between the annuity's present value and the total gift value.
- Since the gift annuity is considered to be part gift and part annuity, a portion of the payment you receive is tax-free.
- If the gift annuity is funded with appreciated property part of the capital gain is avoided entirely, and the rest of the gain may be amortized over the actuarial life expectancies of the donor(s).
We will be glad to provide you with tax and financial results for any size gift of $5,000 or more. - click here to send us an e-mail
Deferred Gift Annuity
A deferred income charitable gift annuity can be an effective component of your tuition savings plan or retirement plan. This is how it works:
In exchange for an irrevocable gift of cash or other property, UMMS will pay you and your spouse (or up to two individuals you choose) a fixed annual income (annuity) for life or a term of years. Unlike a trust, you contribute your gift directly to the Medical System and the general assets of UMMS guarantee your annuity payments.
The annuity amount is determined at the time of the gift based on the ages of the beneficiaries you select but payments are set to begin at a future date, such as when a child begins college or upon retirement. When deferred, the annual income is increased and the charitable income tax deduction is larger.
The deferred charitable gift annuity provides a number of distinctive tax benefits:
- If you itemize, you would be entitled to a charitable income tax deduction in the year of the gift. The charitable income tax deduction is larger due to the deferral of the income payments.
- Since the gift annuity is considered to be part gift and part annuity, a portion of the payment you receive is tax-free.
- If the gift annuity is funded with appreciated property, part of the capital gain is avoided entirely, and the rest of the gain may be amortized over the actuarial life expectancies of the beneficiaries.
We will be glad to provide you with tax and financial results for any size gift of $5,000 or more. - click here to send us an e-mail
Charitable Remainder Trusts
Trusts can play a crucial role in your estate and financial plans. When you establish a charitable remainder trust, your irrevocable gift of cash or other property is transferred to the trustee you select. You and another beneficiary, if you so desire, receive income for life or a term of years. After the lifetimes of the beneficiaries or the term of years, the remainder of the trust comes to the Medical System for the purpose that you specify.
Unlike the charitable gift annuity, payments from a charitable remainder trust are not guaranteed but are paid as long as the trust's assets remain sufficient to make the payment. If the trust's assets are used up, the trust terminates.
Charitable remainder trusts can be established during the donor's lifetime or through a bequest in a will. For each gift to the trust, the charitable remainder must be at least 10% of the net market value as of the date of the contribution. A charitable trust is a binding legal agreement of some complexity, and the Medical System requires that you be advised by an attorney when creating one.
Charitable remainder trusts provide significant benefits to donors:
- If you itemize, you can claim a charitable income tax deduction for UMMS's remainder interest. Generally, the higher the payout rate, the smaller the charitable deduction.
- You can avoid capital gains tax if you contribute appreciated property.
- Probable reduction in estate taxes.
- Avoidance of costs associated with probate and estate administration.
Annuity Trust
The annuity trust is a variation of the charitable remainder trust that pays the named beneficiaries a fixed annual payment, based on a percentage of the fair market value of the annuity trust assets. The annuity payment can be paid for life, for a term not to exceed 20 years, or a combination of life and a term of years. The minimum annuity rate must be at least 5%, but no greater than 50%, of the initial value of the annuity trust and is selected by the donor at the time the gift is made.
The annuity payment does not vary and no additional gifts may be made to this type of trust. The annuity trust appeals to donors who prefer a predictable, regular income payment. Payments are made first from income, then from appreciation and finally from the principal if income earned is insufficient. Income earned in excess of the annuity due is reinvested in principal.
We will be glad to provide you with tax and financial results for any size gift of $50,000 or more. - click here to send us an e-mail
Unitrust
The income you receive from a unitrust varies because it is based on a fixed percentage of the fair market value of the unitrust asset, which can change from year to year. When your unitrust is established, you choose a payout rate. The minimum rate must be at least 5%, but no greater than 50%. Generally, the higher the payout rate, the lower the charitable deduction. In addition to all of the advantages of a life income gift, the unitrust can also provide a hedge against inflation.
In its standard form, the unitrust pays out the stipulated income amount first from earned income then from capital gain and then, if total return is insufficient, from principal. The amount due is recalculated each year based on the unitrust's total asset value as of the designated valuation date (usually January 1st). Variations to the charitable remainder unitrust are designed to limit payments to the lesser of the income earned or the fixed percentage, or to accommodate gifts of non liquid asset such as residential real estate.
We will be glad to provide you with tax and financial results for any size gift of $50,000 or more. - click here to send us an e-mail