Planned Giving

Gift and Estate Planning Services

Many Millsaps alumni and friends make their ultimate gift to the College or achieve long-term philanthropic goals through planned gifts. A variety of planned giving options are available including wills and bequests, trust arrangements, annuities, and life insurance arrangements.

Planned gifts are not necessarily large gifts, although they are often much larger than a donor's annual charitable gifts because of their timing, the type of asset used, and the way in which they maximize one's tax benefits.

Anyone can make a planned gift - and those who do find it is a meaningful way to support the academic excellence, leadership, and service we expect of Millsaps College. Our Gift Services include providing both general and specific gift information that will help you select the best gift option for your needs. We can provide you and your advisors with specific gift illustrations for all gift vehicles.

 

Gifting Strategy

Primary Uses/Benefits

Gift of Appreciated Assets

Income tax savings, avoids capital gains tax, estate tax savings. Easier than making a cash gift.

 

Charitable Gift Annuity

Fixed income for life - partial tax-free, income tax deduction, simple contract, estate tax savings

 

Charitable Remainder Annuity Trust

Avoids capital gains tax, fixed income for life or term of years, income tax deduction, flexible payout rate, estate tax savings, diversity investments

 

Charitable Remainder Unitrust

Avoids capital gains tax, variable income for life or term of years, income tax deduction, flexible payout rate, estate tax savings, diversity investments

 

Charitable Lead Trust

Significant gift and/or estate tax savings; transfer assets to heirs at reduced estate costs; provide future inheritance to grandchildren

 

Gift of Life Insurance

Low cost gift, income tax deduction

 

Retained Life Estate

Income tax deduction, retain the use of gifted asset for life, estate tax savings

 

Bequest of IRA or Retirement Plan at Death

Escapes income and estate tax on plan proceeds which can consume 60-75% of plan assets

 

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Gift of Appreciated Assets

Gifts of appreciated assets are attractive for many Millsaps alumni and friends. First, this type of gift allows them to make a larger gift than what the asset actually cost. For example a stock which cost $1,000 and which has appreciated to $5,000 enables the donor to make a $5,000 gift with an asset that only cost them $1,000. Second, the after tax cost of this kind of gift is actually lower than the after tax cost of selling the asset and giving the proceeds. Consider the following example: Bob and Jan own $10,000 worth of stock that they purchased nine years ago for $3,000. They are considering selling the stock to make a $10,000 gift to Millsaps. They are in the 28% income tax bracket.

 

 

Sell/Gift Proceeds

Stock Gift

Gift amount

$10,000

$10,000

Cost basis

$  3,000

$  3,000

Capital gain

$  7,000

$         0

Capital gains tax (20%)

$  1,400

$         0

Income tax deduction

$10,000

$10,000

Tax savings at 28%

$  2,800

$  2,800

Net tax savings

$  1,400

$  2,800

After-tax cost of gift

$  8,600

$  7,200

 

Deductions for gifts of appreciated assets are limited to 30% of your adjusted gross income. However any unused portion of your deduction may be carried forward up to an additional five years. This will usually enable you to enjoy the full amount of your deduction.

 

How do I go about making a gift like this?
Before making a gift of an appreciated asset, please call us first. While we can and do accept gifts of many types, there are a few that can pose special consideration such as real estate and mineral or timber interests. The most typical asset used for this kind of gift is marketable stocks and bonds. After you have contacted us about your gift intention, we will determine the most effective way to transfer your assets to Millsaps. For securities, this may be stock power, or by transferring the securities to one of our brokerage accounts. We can often save you sales commissions by handling the transaction through one of our broker relationships. Deeds transferring real estate will have to be prepared by our attorneys - subject to our acceptance policies regarding real property. Other assets will be handled on a case by case basis.

 

What about appraisals?
To satisfy IRS requirements, you are required to have an independent appraisal of any asset that does not have a readily available market value such as stock. In some cases Millsaps will also obtain an appraisal, however it is important that you have your own appraisal to substantiate your charitable deduction and to include with your tax return.

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Charitable Gift Annuities

A charitable gift annuity is a simple contract between you and Millsaps College, in which Millsaps agrees to pay you (and/or another named beneficiary) a fixed income for the life or lives of your named beneficiary(ies). The amount of income is based on a rate determined by beneficiary age and is set by the American Council of Charitable Gift Annuities. Many Millsaps alumni and friends have found the charitable gift annuity a very simple way to convert low yielding assets into a higher fixed income payment for retirement, as well as provide Millsaps with a significant gift in the future.

 

Questions and Answers

 

How is a charitable gift annuity set up?
A gift annuity can be set up with a simple four-step process. First you request a proposal that details the specific benefits of a gift annuity based on your situation. Second, we prepare a gift annuity application for your approval. Next the transfer of the assets (check, stocks, bonds or real estate, etc. $10,000 minimum) to Millsaps College takes place. Finally, you receive the formalized gift annuity contract specifying the payment dates and the amount of each payment you will receive for life.

 

What are the tax benefits?
You are entitled to a charitable income tax deduction for the gift portion of the annuity in the year the gift is made. If cash is used to fund your annuity, you may deduct up to 50% of your adjusted gross income; if an appreciated asset, such as stock is used to fund your annuity, your deduction is limited to 30% of adjusted gross income. Another tax benefit is that capital gains are spread over the term of the annuity rather than being reported in the year of sale. Also, depending on the source of your gift, much of the annuity income may be tax-free. Finally, the total amount of your gift is removed from your estate for estate tax purposes.

 

How can a charitable gift annuity be funded?
There are multiple ways to fund a Charitable Gift Annuity. One is through the traditional avenue of a monetary gift. However, a charitable gift annuity may also be funded with appreciated property. In that case your charitable deduction can be taken up to 30% of your adjusted gross income. Another advantage of using appreciated property is avoiding some capital gains and being able to prorate the gain incurred over your lifetime.

For example, Marsha Harold, age 65, wants to use appreciated securities to fund a gift annuity with Millsaps College for $25,000. At her age, the rate of return is 6.7%. Mrs. Harold will receive payments of $1675.00 per year for the rest of her life. She will receive an income tax reduction of $9,500 in the year she funds the annuity. Plus she avoids some capital gains taxes altogether.

 

Can I defer my payments until a late date?
If you do not need your payments to begin right away, there is a plan specifically for you. You can make the gift now, while your income is greater, and defer or postpone the payments until you retire. The payments will be based on your original contribution plus accumulated interest from the time of the gift and on your age when payments begin.

This plan gives you a current income tax deduction, the opportunity to accumulate income for the future, and parts of all future payments are considered tax-free.

 

How do I establish a deferred payment charitable gift annuity?
Suppose John Dodge, age 55, is interested in a contributing to Millsaps. He is also interested in a way to supplement his retirement income. Mr. Dodge funds a deferred payment gift annuity specifying payments to begin in 10 years. Mr. Dodge will receive an immediate income tax deduction for the annuity and will defer all annuity payments until retirement, when he will need the income more. At Mr. Dodge's death, the remaining annuity balance will be available to Millsaps. This plan allows Mr. Dodge to enjoy tax benefits now and greater payments during retirement.

 

Can I establish a gift annuity in my will?
You may wish to establish a gift annuity for someone in your will. In this case, the annuity would become effective at your death, providing regular payments for your loved one beginning immediately from that time. You would also know you are creating a legacy at Millsaps while meeting the needs of your loved one.

 

When does Millsaps benefit?
Millsaps benefits from your gift at your death, and under certain circumstances during your life. Our contract with you requires us to hold your gift in reserve until our income obligations are satisfied.

 

What rate will I be paid?
The rate you (or your beneficiary) will be paid is determined by age. The older the income beneficiary, the higher the rate paid. For example, the rate for a single-life annuity for a 60 year old is 5.2% whereas the rate for a 75 year old is 6.4%. You can view our Single Life rates in the table below.

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Charitable Remainder Annuity Trust

A charitable remainder annuity trust is a gift arrangement whereby you transfer cash or other property to a trust, you retain a fixed DOLLAR income from the trust for life or a period of years, and pass the remaining value of the trust to charity at the end of the trust term.

 

How does it work?
With the assistance of your attorney, you create an irrevocable trust agreement into which you place cash or other assets. You set the terms of the trust - the length of the trust, the percentage payout from the trust, the trustee, the income beneficiary and the charitable remainder beneficiary. These terms become irrevocable upon execution of the trust agreement.

For example, Fred Mills, a retired Millsaps alumnus, decides to transfer $100,000 worth of stock to a charitable remainder annuity trust and chooses to receive $8,000 per year (an 8% payout) from the trust for the rest of his life. After his death, the remaining trust assets are to be used to fund scholarships at Millsaps.

 

What are the benefits?

  • Income Tax Deduction: You will receive a charitable income tax deduction for a portion of what is transferred to the trust.
  • Capital Gains Tax Avoidance: If you transfer appreciated assets to the trust, the assets can be sold and reinvested without capital gains tax. As a result, 100% of the value of the asset can be invested to provide your desired income.
  • Higher Income Potential: Low yielding assets can be converted tax-free to higher yielding assets to provide a greater source of income.
  • Estate Tax Reduction: The full value of the trust is excluded from your taxable estate if you and/or your spouse are the sole income beneficiary(ies).
  • Investment Diversification: Concentrated assets can be sold tax-free and reinvested into a more diversified investment portfolio.

 

Who manages the trust?
A Trustee must be named to manage the trust assets. This might be a trust company, a financial advisor, trusted individual, or in some cases - you can serve as trustee of your charitable trust. The trustee must ensure that annual tax reporting is completed as well as handle the investment of the trust assets. Millsaps College does not serve as trustee of charitable trusts.

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Charitable Remainder Unitrust

A charitable remainder unitrust is a gift arrangement whereby you transfer cash or other property to a trust, you retain a fixed PERCENTAGE income from the trust for life or a period of years, and pass the remaining value of the trust to charity at the end of the trust term.

 

How does it work?
With the assistance of your attorney, you create an irrevocable trust agreement into which you place cash or other assets. You set the terms of the trust - the length of the trust, the percentage payout from the trust, the trustee, the income beneficiary and the charitable remainder beneficiary. These terms become irrevocable upon execution of the trust agreement.

For example, Fred Mills, a retired Millsaps alumnus, decides to transfer $100,000 worth of stock to a charitable remainder unitrust and chooses to receive an 8% payout - calculated on the value of the trust each year -  for the rest of his life. Each year's income may be higher or lower than the initial payment of  $8,000 depending on the investment performance of the trust. After his death, the remaining trust assets are to be used to fund scholarships at Millsaps.

 

What are the benefits?

  • Income Tax Deduction: You will receive a charitable income tax deduction for a portion of what is transferred to the trust.
  • Capital Gains Tax Avoidance: If you transfer appreciated assets to the trust, the assets can be sold and reinvested without capital gains tax. As a result, 100% of the value of the asset can be invested to provide your desired income.
  • Higher Income Potential: Low yielding assets can be converted tax-free to higher yielding assets to provide a greater source of income.
  • Estate Tax Reduction: The full value of the trust is excluded from your taxable estate if you and/or your spouse are the sole income beneficiary(ies).
  • Investment Diversification: Concentrated assets can be sold tax-free and reinvested into a more diversified investment portfolio.

 

Who manages the trust?
A Trustee must be named to manage the trust assets. This might be a trust company, a financial advisor, trusted individual, or in some cases - you can serve as trustee of your charitable trust. The trustee must ensure that annual tax reporting is completed as well as handle the investment of the trust assets. Millsaps College does not serve as trustee of charitable trusts.

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Charitable Lead Trust

A Charitable Lead Trust is a gift arrangement whereby you transfer cash or other property to a trust which pays its income to a qualified charity for a period of years - or a time measured by one or more lives - and which returns the remaining principal to other beneficiaries, usually children or grandchildren at a reduced or eliminated transfer tax.

 

How does it work?
With the assistance of your attorney, you create an irrevocable trust agreement into which you place cash or other assets. You set the terms of the trust - the length of the trust, the percentage payout from the trust, the charitable income beneficiary and the remainder beneficiary. These terms become irrevocable upon execution of the trust agreement, which in most cases is at death.

For example, Elsa Gardner, a Millsaps alumnus, establishes a charitable lead trust in her will that will receive $1 Million of her estate assets. The trust is to pay Millsaps a 5% fixed payout ($50,000) annually for 15 years. At the end of the 15 year term, the trust is to be divided equally between her three grandchildren.

 

What are the benefits?

  • Estate or Gift Tax Deduction: Depending on the length of the trust term, and the payout to charity, a significant portion - if not the entire amount - of the trust, qualifies for an estate or gift tax deduction.
  • Delayed Inheritance: The trust term might allow for a full-value inheritance to your children or grandchildren at a time when they might have greater need or ability to handle a large bequest.

 

Can this be done while I'm alive?
Yes! When created during your lifetime, you receive a gift tax deduction rather than an estate tax deduction. Furthermore, if you live beyond the term of the trust, you will be able to witness the income benefits that your trust provides to charity as well as the remainder benefit passing to your heirs.

 

Who manages the trust?
A Trustee must be named to manage the trust assets. This might be a trust company, a financial advisor, trusted individual, or in some cases - you can serve as trustee of your charitable trust. The trustee must ensure that annual tax reporting is completed as well as handle the investment of the trust assets. Millsaps College does not serve as trustee of charitable trusts.

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Gift of Life Insurance

A gift of a Life Insurance policy is a gift arrangement whereby a charity is given ownership of a new or existing life insurance policy, or is made the beneficiary of a new or existing life insurance policy.

 

How does it work?
It depends on whether a new or existing policy is given, and whether or not the charity becomes the owner of the policy or simply the beneficiary.

 

Method

What Happens

Tax Effects

Gift Existing Policy

Full rights of ownership are assigned to the charity. Donor makes annual gifts to the charity sufficient to cover premium payments.

Donor receives income tax deduction for net cash value; annual gifts to charity are deductible; death proceeds excluded from taxable estate.

Gift New Policy

Donor applies for new policy and upon insurance, transfers ownership to the charity. Donor makes annual gifts to the charity sufficient to cover premium payments.

Donor receives income tax deduction for annual gifts to charity; death proceeds excluded from taxable estate.

Charity as Beneficiary Only

Donor names the charity as beneficiary of the policy. For existing policies, a form from the company is required to do this. Donor pays premiums to company.

No current income tax deduction since donor owns the policy; death proceeds are excluded from taxable estate.

 

What are the benefits?

  • Large Gift for Low Cost: Aside from the tax benefits mentioned above, a gift of life insurance is a cost effective way of making a large future gift with comparatively small costs.
  • Great for Younger Donors: Many young, high-income earners would like to make a large gift from their assets, but are still building wealth through savings and investment. Life insurance gifts are a cost-effective way for those 50 and younger to make a significant future gift to charity, while reducing current income taxes.

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Retained Life Estate

A Retained Life Estate is a gift arrangement whereby you give legal ownership of your residence or farm to a charity, but retain a life estate - that is you retain the right to live in or enjoy the gifted property for the remainder of your or someone else's life. The charity receives the property without restriction at the death of the holder of the life estate.

 

How does it work?
Ann Maxwell, a widowed Millsaps alumnus has decided to give her home to Millsaps, but reserves the right to live in the home for as long as she lives. Her attorney prepares a "Life Estate" agreement deeding the home to Millsaps which agrees to pay the ongoing property taxes on the home. Ann pays for her fire insurance as well as any maintenance on the home. In return for her gift, Ann receives an income tax deduction based on the present value of her future gift. In addition, Ann's home will not be tied up in probating her estate at her death, but will immediately pass to Millsaps without restriction.

 

What are the benefits?

  • Immediate income tax deduction based on the present value of the future gift.
  • Removes the property from the potential costs and delays of probate.
  • Potential estate tax savings since property is excluded from taxable estate.

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Gift of Retirement Plan Assets

A gift of retirement plan assets is a gift arrangement where IRA or other "tax-qualified" plans are given to charity - usually after the death of the plan owner. As with any estate asset, retirement plans are subject to a transfer tax at death. This alone can reduce the amount heirs receive by as much as 55%. However the estate tax is not the only cause of erosion. Because the law characterizes these assets as "Income in Respect of a Decedent" or IRD, retirement plan assets are also subject to income tax at death. Combined, the total tax at death can dramatically reduce a retirement plan's value.

 

How does it work?
Retirement plan assets can be used to fund bequests by simply naming a charity or secondary beneficiary of those assets. Or, you could establish a charitable remainder trust in your will and name someone as a life-time income beneficiary with a charitable organization receiving the remainder. If a spouse is the income beneficiary, the marital deduction eliminates any estate tax on retirement plan assets; plus because the trust is tax-exempt, it will not be taxed on the retirement plan assets placed in the trust, so no income tax will be due. The total tax savings on a large retirement plan can be enormous.

 

 

Give IRA to Heirs

Give IRA to Charity

Give IRA to 20 Yr 7% Charitable Remainder Trust

Non-IRD Property

$600,000

$600,000

$600,000

IRA (IRD Estate)

$1,000,000

$1,000,000

$1,000,000

Total Estate

$1,600,000

$1,600,000

$1,600,000

Estate Tax

$389,500

-0-

$163,050

Income Tax

$241,758

-0-

-0-

Total Estate to Heirs

$968,742

$600,000

$1,241,573

Total to Charity

-0-

$1,000,000

$680,704 *

Net Value of IRA

$368,772

$1,000,000

$836,948

Tax Rate on IRA

63.13%

0%

16.3%

* Present value of future bequest.

 

What are the benefits?

  • Eliminates the income tax imposed on the retirement plan beneficiary.
  • Reduces estate taxes by removing the asset from the taxable estate.
  • Allows other estate assets to pass to heirs without the burden of income taxes.
  • Can provide a lifetime income (via charitable trust) to a spouse or other heir, and escape the income tax imposed on the plan beneficiary.

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Heritage Society

Planned gift donors are honored through the College's Heritage Society. When you make a planned gift commitment to Millsaps - regardless of size - you become eligible for membership in this important group of people. Heritage society members receive inclusion in a number of Millsaps special events and have other opportunities for recognition.

For additional information about planned gift opportunities, contact the Office of Institutional Advancement at 601-974-1023.

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Estate Planning Services

Because charitable gifts are rarely made in a vacuum, they often affect the other parts of your overall estate plan. Estate planning can be confusing and intimidating. Our estate planning services are especially designed to help you clarify your personal inheritance and philanthropic goals and to translate those goals into a cohesive and easy-to-understand plan.

We then work with you and your other advisors to implement your plan in a timely manner. The end result is the peace of mind that comes from knowing that your plan reflects the values that make you who you are; a plan that leaves a heritage for others to follow.

There is no charge or charitable obligation for these services.

 

Wills: Why You Need One

 

Avoids Distribution Under The Law Of Intestacy
The State Intestacy Law will pass property to certain relatives of the decedent. These laws have been drafted to be "fair" in the average situation, but most persons would like to choose who will receive their estate when they die.

 

Permits The Nomination Of A Guardian For Minor Children
Without a nomination in a will, the court will appoint a guardian of the person for minor children. Relatives are not always the best choice for a guardian, and consideration must be given to the financial situation of the potential guardian, as well as his or her health, age, willingness and ability to care for your children.

 

Waiver Of The Probate Bond
In the absence of a will, the court will require a fiduciary bond to be posted by the administrator (executor) of the estate to guarantee the replacement of any funds embezzled or diverted by him. Since this additional cost must be borne by the estate, the estate owner may want to waive the bond requirement in the will. Great care should be used in selecting an executor.

 

Choosing The Executor
The duties of the Executor of an estate can be very time consuming and frustrating, especially to a spouse who has just lost his or her mate. In the will, a qualified individual and/or corporate trust company can be chosen to handle these responsibilities.

 

Making Specific Bequests To Individuals
An individual may bequeath specific items of jewelry, heirlooms, furniture, or make cash bequests, and be certain that they will pass to the proper persons. Without a will, written or oral instructions may not be followed.

 

Sale Of Assets During The Probate Administration
Additional expense to the estate can generally be avoided by permitting the sale of assets without the executor having to publish a notice of sale in the newspaper. A sale of assets may be necessary in order to pay death taxes and expenses of the probate.

 

Authorizing The Continuation Of A Business
Unless the will authorizes the continuation of a business, the executor must operate it at his or her own risk. Many executors may elect not to administer the estate unless this risk is borne by the estate.

 

Deferring Distributions To Minors
When parents die leaving minor children, each child's share of the estate must be held in a guardianship account until he or she attains the age of 18 (or 21), at which time the entire remaining share is distributed outright. Trust provisions can be placed in the will to defer these distributions until a more mature age.

 

Tax Savings
Certain, substantial tax savings are possible through the use of trusts. The will can be used to create trusts after death. Such trusts are known as Testamentary Credit Shelter Trusts. Similar tax savings, as well as probate savings, can be achieved through the use of trusts established during life, known as Living Credit Shelter Trusts.

 

Peace Of Mind
Although this advantage cannot be measured in dollars and cents, when the estate is in order an emotional load is lifted from the person who is concerned for his or her family's well-being.

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For more information contact:

Gift and Estate Planning Services
Millsaps College
P.O. Box 151191
Jackson, MS 39210-1191
(voice) 601-974-1035 (fax) 601-974-1088

 

DISCLAIMER
The information contained on this page is for educational purposes only. The reader understands that Millsaps College is not rendering legal advice and that the reader should seek independent legal counsel when contemplating estate planning decisions.

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