Planned Gifts and Bequests

Including the CF Foundation in your will or living trust is also a very simple and easy way to make a significant gift to the college. Adding a simple statement to your living trust or will is all that you need to do; in many cases, you can simply add a codicil to an existing document.

Although this gift creates no immediate income tax benefits, it will be 100% deductible for estate tax purposes. If you are unable to make an immediate outright gift, but would like to provide a gift to help us in the future, this is an ideal vehicle to accomplish that objective.

Your will can easily be the cornerstone of your estate plan. In Florida, the state will determine what will happen to your funds and property unless you have made a formal will. The will enables you to determine how your property and money will be divided and distributed; it can also provide security for family members, minimize taxes and estate costs, and direct charitable gifts according to your wishes. A living trust may be used as a substitute for a will or in conjunction with one. If you wish, you can design your will so the proceeds to the CF Foundation can be deferred while lifetime income is paid to a family member.

There are several types of bequests through wills and living trusts: 

- A specific bequest is a particular parcel of real estate, stock or other identified item.

- A cash bequest states that the CF Foundation, Inc. would receive a specified amount or percentage of money from your estate for either undesignated use or a use recommended by you.

Residuary bequests are made from the assets remaining in your estate after all specific and cash bequests, taxes, settlement costs and debts are satisfied. You may leave all the residual assets of your estate to the CF Foundation, Inc., or a percentage, if you choose to divide the remainder of your estate among different beneficiaries.

Your bequest may be unrestricted enabling the CF Foundation Board of Directors; in consultation with the college to use, your gift for the highest needs at the time your gift is received. You may also designate your gift for a specific program such as student scholarships, or endowed chairs. Your gift may be made in your name or to memorialize a loved one.

If you have made or are planning to include the CF Foundation in your estate plans, please contact us. We can provide some guidance to you or the professionals helping you plan your estate. We can help identify gifts that would be eligible for match funds, and the greatest college needs, and can arrange for a named opportunity for you and/or your family.

We understand that you may wish to remain "anonymous" and we certainly will respect your wishes. However, knowing about your gift will enable us to help you plan and use it in a way that accomplishes the greatest good. In addition, it will give us an opportunity to thank you.

Charitable remainder unitrusts, annuity trusts, pooled income funds, and gift annuities are a few of the life income arrangements available for different circumstances. You and your family may benefit in particular from a life income plan if you are:

• Thinking about selling highly appreciated assets such as land, real estate or securities that will be subject to substantial capital gains tax.
  
• Looking to establish a steady source of permanent income for yourself and/or your spouse.
  
• Desiring to convert a highly appreciated, but low- or non-income producing asset, to one yielding higher current income.

Life Income Gifts and Bequests can provide you with income tax deductions, avoidance of capital gains taxes, reductions in your estate taxes; freedom from investment worries, and usually, increased income that can help you during your retirement years. Deferred gifts can also preserve your asset values and make considerate arrangements for children, grandchildren and other loved ones.

This trust offers you the chance to substantially reduce your gift and estate taxes, and in some cases eliminate them entirely, by placing funds in a charitable lead trust for up a given period of time, usually a minimum of 10 years up to a maximum of 20 years. While your funds are in trust, the CF Foundation receives the annual income to provide direct support to help the college. This income may be matched as well.

To implement this type of trust you might want to consider using income-producing property (those that have the potential to increase are best). This property is then transferred to a trust for an agreed-upon number of years for the benefit of the CF Foundation. When the period for the trust ends, the property or other assets revert to you or goes to family members or other beneficiaries, as determined by you. You receive an immediate annual income tax deduction, and receive the asset back (or heirs receive the asset) at likely an appreciated value while saving the annual taxes during the period it was in the trust.

If you want a vehicle that is simple and easy then the charitable gift annuity may be one you wish to consider. The annuity is a contract between you and the CF Foundation and is backed by the "full faith and credit" of the college (even requiring the president's signature). The arrangement calls for the Foundation/College to pay you a specified amount annually. Gift annuities may provide for one or two life-income beneficiaries (e.g., husband and wife) or it may be used to provide financial support to a friend or family member.

We determine gift annuity rates based on the age(s) of the beneficiary (ies). The rates range from 5 percent to 12 percent or more. A portion of each income payment you receive may be tax-free. Since a gift annuity is viewed for tax purposes as part gift and part purchase of an annuity, a portion of each payout is treated as return of principal and therefore is free from income tax. Gift annuities are especially valuable if you want to enhance your retirement income.

If you find yourself "locked-in" because you have securities that are now highly appreciated and pay low dividends, you may want to consider this option. If you sell your securities you will have a large capital gains liability, but transferring these assets to the CF Foundation will enable you to realize a full fair market value and to then receive a tax deduction, avoid most capital gains taxes, and save on estate taxes as well. The final result will be you receiving higher dividends.

You will receive an income tax deduction for the remainder, or gift, portion of the annuity; this contribution is deductible in the year that the gift is made, with an additional five-year carry-forward period.

If you want a long-term income with inflation protection over time, the charitable remainder unitrust is a good vehicle to accomplish your goal. It is also a way to provide the Foundation with resources to help the college while satisfying your personal and family financial needs.

The CRU is a plan in which you irrevocably place cash, securities or real property with a trustee, such as the college, with instructions to pay income to you and/or other designated beneficiaries, usually for life. The income is a fixed percentage of the trust's value; the percentage payout is established with you when the trust is created. The law requires that the payout must be at least 5% annually. After the lifetimes of the beneficiaries, the remaining assets ("remainder interest") are then transferred to the CF Foundation to serve the college.

The income paid by a unitrust is variable. The unitrust assets are revalued annually and the income paid to you is determined by multiplying the current market value by the previously established percentage payout rate. If actual income earned is less than the stated amount, capital gains and principal are used to make up any shortfall. Any income in excess of the stated payout amount is added to principal so that the trust corpus can grow over time. Selecting a relatively low unitrust, payment will enable your principal to grow at a faster rate and may provide a hedge against inflation. As the unitrust principal grows, so does the annual payment.

The unitrust provides several significant tax advantages. Any sale of appreciated assets through a unitrust is exempt from capital gain tax, allowing you to use the appreciation in your securities or real estate, and convert it to income for life without paying a capital gains tax.

By establishing a unitrust, you also create an immediate income tax deduction for the value of the remainder interest, or gift portion, which represents the discounted present value of the remainder that will be distributed to the CF Foundation at the end of the trust's term. The removal of a sizable asset from your estate may also yield estate-tax savings. You can make additional contributions to your trust at any time in the future.

One option to the standard unitrust is the "net income unitrust." This type of unitrust provides for annual fixed percentage payments of the trust's annual value, or the net amount of income actually earned by the trust in any given year, whichever is less. This type of unitrust can only pay out "income." You might want to consider using a net income unitrust if you are considering real estate gifts, which may take some time to sell and thus temporarily provide no income to the trust. Your annual payments begin once the real estate is sold, with no immediate capital gains tax liability, and the unitrust is allowed to reinvest in income-producing assets.

The "net income with makeup unitrust" operates the same way as the net income trust, with the exception that in the years during which the trust's earnings exceed the stated, fixed percentage, the excess earnings are used to make up for any payments that were less than the fixed percentage in earlier years.

The "flip unitrust," starts out as a net income trust and later "flips" to a standard unitrust. Such a trust is established as a net income trust, or net income trust with makeup, when it is funded at least 90% with assets that are difficult to sell, such as real estate.

The "flip" or switch is triggered by the sale of the asset, and once flipped, the trust may begin to make payments as a regular unitrust in the next taxable year. During the taxable year in which the asset is initially sold, the trust operates as a net income trust, with donors receiving a payment of a fixed percentage of the trust's annual value as established when the trust is created, or the net amount of income earned by the trust, whichever is less. The flip trust enables you to eventually enjoy the more beneficial payout terms of the standard unitrust even while initially funding the trust with "unmarketable" assets.

If you are in need of dependable fixed income, a charitable remainder annuity trust may be an option you want to consider. This type of trust may be funded using cash or securities. Real estate is not usually considered an appropriate asset for this type of plan.

The annuity trust pays a set annual percentage. All assets placed in the trust are valued at the time of transfer and the established percentage payout (at least 5 percent) is then applied to determine the fixed dollar payout to be paid each year throughout the term of the trust. When income is not sufficient to meet this payout, principal will be used. This income is not guaranteed, but will be paid as long as any principal remains in the trust.

If you want certainty of amount, then this trust is one to consider. It is important to remember that while your income will not decrease during the life of the trust, neither will your income grow as the underlying principal increases in value. The result is that there is not a hedge against inflation. Younger donors tend to consider a standard unitrust instead, while senior donors may prefer the certainty of payout.

The annuity trusts offers significant income tax benefits including avoiding capital gains taxes, an immediate income tax charitable deduction (based on the remainder value of the trust) and estate tax savings.

This annuity offers the option of allowing you to defer the receipt of annual payments until a later time, e.g. as when you retire. By deferring your income, you will receive a larger income tax deduction as well as greater income once the payments begin. If you are not able to deduct contributions to an individual retirement account or pension plan, the deferred-payment annuity may be an option you want to consider.

Generally, stocks, securities, bonds and cash are the best assets with which to fund a charitable deferred gift annuity.

Please note that all of the life income gifts listed can also be designed to help the college and take effect after your death. You can create this arrangement in your will, and will serve as a deferred gift for the CF Foundation and its service to the college after you have taken care of your beneficiaries. Your gift, now or in the future, can make a tremendous difference in the lives of our students and the community we serve.