Thoughtful and precise estate planning yields special advantages for donors and their heirs while enabling them to support the important work of Student Services at Michigan State University in significant and lasting ways. We encourage donors to consult with their legal and/or tax counsel when conducting charitable estate planning.
Another excellent resource for donors to explore charitable estate planning opportunities and strategies is the university’s Office of Gift Planning. Our gift planning professionals can help those interested in remembering and supporting Student Services fulfill philanthropic goals in the most efficient manner for themselves, their heirs and MSU.
Below is a brief listing of popular planned giving options available to benefit MSU.
CHARITABLE BEQUEST Through a Will or Personal Trust
Gifts provided through wills and personal trusts have become the foundation of the American philanthropic tradition. In fact, the vast majority of planned gifts established for and ultimately received by MSU are the result of charitable bequests established in one’s will or personal trust. Many individuals choose to include the college in their will or trust, providing for a percentage of their estate or a fixed dollar amount to be transferred to the university. Such gifts enable you to make significant contributions that may not have been possible during your lifetime.
GIFTS OF REMAINING RETIREMENT PLAN ASSETS
Individual account plans-such as IRA, Keogh, 401(k) or 403(b) resemble tax-sheltered savings accounts. If a participant dies before the entire account has been distributed, the remaining balance can be transferred to an heir or to MSU. The principal advantage of donating retirement plan assets is that you avoid all income and possible estate taxes, whereas giving the assets to individual heirs may trigger a total effective marginal tax rate (ordinary income and estate taxes) that is potentially incredibly steep. Scenarios where the value of remaining retirement plan assets are reduced by 75 percent or more are not uncommon.
CHARITABLE LIFE INCOME PLANS
Charitable remainder trusts, charitable gift annuities, and deferred gift annuities represent creative developments in the evolution of charitable estate planning. Their flexibility enables you to provide a lifetime stream of income for yourself and/or your beneficiaries, satisfy philanthropic goals, and avoid substantial estate or transfer and capital gains taxes. Through a charitable life income plan, you are able to designate how you want MSU to use these funds once the life income plan (or split-interest gifts, as they are sometimes referenced) has matured. Under a charitable life income plan you receive income from these assets which have been irrevocably transferred from your portfolio or estate for a lifetime, lifetimes or certain time period that you select. MSU is able to use these funds only when your income interest expires or if you revoke your income interests while you are still living. Funding a life income plan with appreciated long-term capital gain property enables you to dispose of an investment to protect your profit or to reinvest for a higher yield while avoiding substantial capital gain taxes. You retain the full value and benefit of the asset(s) for personal income and charitable deduction purposes and provide a generous future gift to Student Services that will be utilized per your wishes.
Ann Marie Lindley, Director of Development, Student Services, Michigan State University
(517) 423-7543
NOTE: This information is prepared exclusively for the information of friends and donors of Student Services at Michigan State University. Its purpose is to point out current tax developments that may be helpful in tax and financial planning. Donors should always consult with their attorney as to the applicability of any ideas to their own situation.
