Life income gifts include charitable gift annuities, charitable unitrusts, annuity trusts, and pooled income funds.

Overview

All life income plans offer current income tax deductions, and all provide the opportunity to avoid and/or reduce capital gains tax when you use appreciated property to make the gift. Each plan is designed to help you reduce or eliminate gift and estate taxes. With these plans, your gift is available to Dickinson College only after the income period you select. Income is payable for life or for a term of up to 20 years. You may designate how the College uses your life income gift proceeds.

Life income gifts created by you may pay income to others during their lifetimes.

Careful planning and financial/legal advice are important in determining the effectiveness of life income plans in accomplishing your personal and financial goals.

Charitable Gift Annuity

A Charitable Gift Annuity (CGA) is by far the most common and easiest of life income vehicles. A CGA is simply a contract whereby you agree to transfer assets to the College and in return the College agrees to make regular, fixed, guaranteed, lifetime payments to you and/or a beneficiary you select.

There are two primary types of CGA contracts, Immediate and Deferred.

Top Reasons Why A Charitable Gift Annuity Makes Sense

• You receive a fixed, secure income for life.
• You receive an immediate income tax charitable deduction.
• Part of your income may be tax-free.
• If you make your gift with appreciated securities, you avoid immediate capital gains taxes.
• If you make your gift with low-yielding securities, you may actually increase your current income.
• You may reduce your taxable estate.
• You have the satisfaction of making a difference to the future success of Dickinson College .
• You have the pleasure of perhaps making a gift of a lifetime, one far larger than you would have ever imagined.
• 100% of your gift will ultimately benefit Dickinson ; unlike a commercial annuity, no commissions or management fees are ever assessed.
• You will be invited to join the Old West Society.

Immediate Charitable Gift Annuity

An immediate payment charitable gift annuity provides for a fixed guaranteed lifetime income that will depend on the age of the income beneficiary.

You can set up a gift annuity with a minimum gift of $10,000. The minimum age for participation in an immediate payment charitable gift annuity is 60 years old. The annuity payment to the donor is set at the time of the gift. Each payment depends upon the size of the gift, the age of the donor, and the number of beneficiaries. A portion of each annual payment is tax free for a set number of years. Therefore, the effective rate of return for a charitable gift annuity agreement is considerably greater than a fully taxable investment.

When an annuity is established, the donor receives an immediate charitable deduction for the gift portion of his or her contract. If you use appreciated securities to make an annuity gift, you will pay no capital gains tax on the gift portion of the agreement and there will be a reduction in the capital gains tax liability on the annuity portion. According to federal law, the capital gain is not paid all at one time but paid on a pro-rated basis over the donor's life expectancy as you receive each income payment.

Dickinson College follows the payout rates calculated by the American Council on Gift Annuities. These rates are reviewed several times annually to reflect changes in the economy and IRS policy.

Current suggested rates are:

Deferred Charitable Gift Annuity

The deferred charitable gift annuity is a variation on the immediate payment annuity. It extends a two-phase benefit to donors who are at least 45 years old with a $10,000 minimum contribution. First, the donor receives a charitable income tax deduction when the gift is made. Second, the donor receives fixed annual payments that begin at a specified date in the future-typically after retirement, but no earlier than age 60.

The gift grows tax-free while the donor has the benefit of a guaranteed future income. Future annuity income depends upon the size of the gift, the age of the donor, the length of the deferral period, and the number of beneficiaries. Income payments are taxed according to the laws and rates in effect at the time the payments begin. When funded with appreciated securities there will be no capital gains tax liability until the payments begin.

The deferred payment charitable gift annuity is an ideal gift arrangement for professionals planning their retirement years where they want to supplement future retirement income. A variation called the Flexible Deferred Gift Annuity allows the donor to vary the starting date of the payments. If the donor chooses an earlier income payment, it is at a reduced rate while a later payment is at an increased payment rate.

Dickinson College follows the payout rates calculated by the American Council on Gift Annuities. These rates are reviewed several times annually to reflect changes in the economy and IRS policy.

Current suggested rates are:

Charitable Remainder Unitrusts

The charitable remainder unitrust is a legal agreement that specifies how the assets placed in the trust must be managed. A unitrust is different than an annuity trust because the income received by the donor will vary. The trust fund is individually managed by Dickinson College , by a trust company or broker you select, or by a trustee chosen by you. Dickinson requires any fund under its management be established with assets of $100,000 or more. Those assets may be cash, securities, real estate or other tangible property.

Many benefactors choose unitrusts for gifts of appreciated property because there is no capital gains tax on the sale of an appreciated asset by the unitrust. Thus, the full value of the asset is reinvested to produce a stated payment or annual income to the donor and/or appointed beneficiaries. Because of this, many donors find this a perfect way to turn real estate into an income producing gift.

When establishing a charitable remainder unitrust, the donor receives an income tax charitable contribution deduction. The amount of the deduction depends upon the age of the beneficiaries, the percentage payout stated in the trust agreement, and the fair market value of the assets used to fund the trust. Should the amount of the charitable deduction be greater than 30 percent (for a cash gift) or 50 percent (for appreciated assets) of the donor's adjusted gross income, the excess contribution can be carried forward for five additional years.

You may make additional gifts to a charitable remainder unitrust in any amount whenever you wish. Additional gifts will result in a higher annual payment and an additional income tax deduction.

Charitable Remainder Annuity Trusts

You may create a charitable remainder annuity trust by irrevocably transferring cash or securities to a separate trust for our benefit. Each trust fund is individually managed by Dickinson College , by a trust company or broker you select, or by a trustee chosen by you. Dickinson requires any fund under its management be established with assets of $100,000 or more.

Setting up a charitable trust provides the donor with an immediate income tax deduction for a portion of the transferred assets. When the trust is established, a fixed dollar amount is set and is paid to the income beneficiary at least annually. A variation of the trust allows payments to be made for a term of years to children, friends, or family members up to a term of 20 years.

At your death, the death of your beneficiaries, or the end of the trust term, the trust terminates and then assets of the trust are payable to Dickinson College for the use you stipulate.

Please note that once the charitable remainder annuity trust is established, no additional contributions can be made to the trust. If the donor uses long-term appreciated securities to fund the trust, he or she can avoid any capital gains tax on the assets increased value.

Pooled Life Income Fund

The Dickinson College Pooled Life Income Fund is similar to a mutual fund. Individual gifts are combined and assigned proportionate share interests in a common trust fund investment. The current earnings of the fund are paid quarterly to the income beneficiaries.

The investment objective of The Dickinson College Pooled Income Fund is to seek a high current rate of income consistent with prudent investment risks. The funds are managed by the College under the supervision of Wachovia Bank at no expense to the donor.

Participation in the Dickinson College Pooled Life Income Fund provides the donor with an immediate income tax deduction for the gift portion of the investment in the Fund. Income generated by the Fund is paid to the donor for their lifetime and/or the lifetime of another designated income beneficiary. All payments are taxed as ordinary income. When a donor uses long-term appreciated securities to make a pooled fund gift, the donor avoids the capital gains tax on the full appreciation of the gift assets. The full fair market value of the gift will be reinvested into the diversified portfolio of the pooled fund assets.

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