In this latest blog our US Administrator, Nancy Bikson Esq, shares an overview of the work of our University of Aberdeen Foundation and planned giving options available to those who may be considering leaving a donation to support the University of Aberdeen.
We encourage you to support the University of Aberdeen Foundation in its mission to provide meaningful support to education in general and to the University of Aberdeen in particular as the University continues to provide a home of excellence both in its academic endeavours and in its commitment to its students.
Since 1994 the Foundation has accepted donations of cash, shares and tangible personal property. Now, in order to best help our donors give in ways which are most beneficial to them, we want to offer you options to give through planned giving vehicles which will support the Foundation in its work to help the University and education.
As you may know, in the United States, planned giving is known by various names, including estate planning and gift planning. There are a number of ways in which you can support the University of Aberdeen through planned giving vehicles which encompass your philanthropic desire with appropriate tax and financial benefits to you and to the Foundation’s work.
The following are the most common types of planned giving instruments. We are delighted to discuss any of these with you in order to provide you with a bespoke method of supporting us whilst we continue to support you.
1. Bequests (Legacies)
Bequests are among the most common ways donors leave planned gifts. Donors can leave bequests in their will, which are residuary, pecuniary, or specific bequests. Residuary bequests involve leaving all or a particular percentage or portion of an estate. Pecuniary bequests involve a donor leaving a predetermined amount of money. Finally, donors can also leave specific bequests, which means leaving a particular item (e.g., art, property, or an asset). We can help you with language for your will, please let us know if this would be of interest too you.
2. Charitable Gift Annuities
Donors transfer assets to the Foundation and, in exchange, receive regular payments from the Foundation, with the remainder going to the charity after the donor’s passing. Unlike in the United States where a nonprofit would have an annuity fund itself, we would purchase a bespoke policy for you after discussion with you of your wishes.
3. Charitable Remainder Trusts
This arrangement is an individually managed trust that may be tailored to meet your specific financial needs and can provide either a fixed or variable income for the life of the beneficiaries or for a set number of years, not to exceed 20.
The donated assets (typically cash, securities, and/or real property) are irrevocably transferred to a trustee. There are two variations:
- A charitable remainder annuity trust pays income as a fixed dollar amount that remains constant for the term of the trust.
- A charitable remainder unitrust pays income that varies from year to year.
At the termination of the trust, the remaining assets pass to the Foundation for its general purposes or for the use you specify. A charitable deduction for a portion of your contribution is available on your income tax return in the year you make the gift.
A charitable remainder trust is a brilliant way of making a substantial donation to the Foundation while 1) receiving a tax deduction when you make your initial and subsequent donation(s) 2) avoiding paying capital gains tax on an asset you donation 3) receiving income for the period of the trust or your life, as you have determined and 4) ensuring that the Foundation will receive the assets of the trust at its termination.
The Foundation will be able to make plans with the knowledge that these funds will be coming to it.
4. Charitable Lead Trusts
This arrangement provides income to the Foundation for a period of years, after which the trust property typically passes to your heirs.
- Income-producing assets which are expected to gain in value, such as stock or income-producing real estate, are irrevocably transferred to a trust.
- The Foundation receives income from the trust for a specified number of years, after which the property in the trust is transferred to the heirs without the imposition of any additional taxes.
- An immediate charitable deduction on your gift tax return is available for the present value of the total income stream the Foundation will receive during the trust term.
- This gift can reduce or effectively eliminate the gift and/or estate tax that would normally be payable on the transfer of these assets to your heirs.
- With this trust arrangement, you are able to ensure that:
- The Foundation can plan for the use of a stream of income for a number of years.
- When the trust terminates, the assets in the trust will pass, with no additional tax, to your heirs or other recipients
- The trust property has been removed from—and therefore is not taxable in—your estate.
5. Life Insurance Policies
This type of planned gift vehicle is very straightforward. The Foundation is named the beneficiary on your life insurance policy. In addition or otherwise, a current life insurance policy can be transferred to Foundation, so the Foundation becomes the policy’s owner. This approach allows for a significant donation at a lower cost to donors.
6. Retirement Account Beneficiary Designations
Most distributions from retirement plans (other than Roth IRAs) are subject to income taxes—and possibly estate taxes—if left to an individual; however, a charity that is named as the beneficiary does not pay income or estate taxes on the distribution due to its tax-exempt status. Therefore, if you name the Foundation as a beneficiary of your retirement plan, the full value of what will be distributed to the Foundation can be used to support the purpose that you designate.
7. IRA Charitable Rollover
You may also be able to make a gift to charity and take advantage of tax savings with a “qualified charitable distribution” or “IRA charitable rollover” from your Individual Retirement Account (IRA). Under Section 408(d) of the Internal Revenue Code, Americans over the age of 70 ½ may distribute an amount, not to exceed $105,000 in a calendar year, from an IRA to the Foundation or other public charities, tax-free. The annual limit will be adjusted annually for inflation. The amount of the allowable QCD distributions will be reduced by any deductible contributions made to an IRA on or after you reach 70 ½.
If an IRA owner directs the IRA plan administrator to distribute an amount, not to exceed $105,000 in 2024, to a public charity, the distribution counts toward the owner’s required minimum distribution (RMD) but is not included in the IRA owner’s income for income tax purposes. Although the IRA owner is not entitled to a charitable deduction for the distribution, the distribution benefits charity and does not count as income to the owner.
8. Gift of Real Estate
The gift of your home is a unique and meaningful way to support the Foundation. You can enjoy the satisfaction of making such a gift during your lifetime—without affecting your current lifestyle—by a special arrangement called a retained life estate. Real estate can also be a valuable asset when used to fund either a charitable remainder trust or a charitable lead trust.
We are extremely grateful to each and every one of our American friends who has decided to leave a lasting legacy to the University of Aberdeen through their estate planning.
If you are in the US and considering remembering the University with a gift you can discuss your planned giving options with Nancy:
Telephone 646-867-0994
Email nancy.bikson@chapel-york.com
If you are considering leaving a gift but would like to find out more about how it could be directed, Vanessa Holmes, Legacy Officer at the University of Aberdeen would be delighted to discuss the many areas you can support to ensure that you leave a lasting legacy for our University and our students:
Telephone +44 (0) 1224 274132
Email vanessa.holmes@abdn.ac.uk
