What is Gift Planning?

Many people plan to make charitable gifts--someday, when they can afford it. Unfortunately, good intentions don't always carry us to our goals. Gift planning is a thoughtful strategy that may allow you to make the gift of your choice while benefiting your personal finances. This is possible through advantageous tax laws that provide powerful incentives to support public and private charities.

Through gift planning, it is possible to reduce or eliminate federal and state taxes owed on the value of a gift. Gift planning can work in your favor when it comes to paying taxes on income, capital gains, gifts, an inheritance, and your estate. These tax benefits are available to individuals at all income levels.

The foundation's Gift Planning staff can answer your questions. Contact us to set up a confidential meeting to discuss your goals and concerns. Gift planning can help you help Rutgers and yourself.

What can we do for you?

We are the big-picture people. Our staff understands the tax laws and can guide you in planning your personal finances. We can help you in retirement planning, suggest options for appreciated securities and property, and maybe increase your income in the process. We also know Rutgers inside and out. Contact us for ideas even if you are not ready to commit to a gift.

We can work with your professional advisor and can supply you with documents for your attorney's advice and approval. If you don't have an advisor, we can provide you with names of professionals in your area. Our financial planning information may be helpful to you right now.

Financial Planning Assistance - It’s not just for wealthy people

Whether you are saving for retirement, a child's college education, or a down payment on your first home, you need to plan your route. The Rutgers University Foundation wants to help you reach your goal. Many people don't realize that philanthropy can be an important tool in financial planning. Certain charitable gifts, properly packaged, can reduce taxes, generate income, or free up frozen assets. This type of philanthropy, called gift planning, can be especially useful if you have appreciated securities or real estate. We can explain several income-producing and tax-saving strategies related to charitable giving.

A Rutgers Foundation financial planning representative can also come and speak to your club or civic group. These talks are easier to schedule on or near one of the three Rutgers campuses in Camden, Newark, and New Brunswick/Piscataway. If you are farther away, call us anyway. Our representatives do a considerable amount of traveling and will try to accommodate you.

Regardless of your age or income, you can benefit from financial and estate planning. Even if you are not considering making a charitable gift at this time, call Jim Dawson at (732) 932-8808 for financial planning assistance.

Among the gift planning strategies for financial planning are:

· A Rutgers Deferred Payment Gift Annuity

· A Charitable Remainder Trust

· The Rutgers Pooled Income Fund

Including Rutgers in Your Will
Gifts of Life Insurance
Gifts of Real Estate
Gifts of Stocks and Bonds
Gifts of Tangible Personal Property

Deferred Payment Gift Annuity

This type of gift is a contract between you (the donor) and the Rutgers Foundation whereby the foundation guarantees to pay you, or persons you designate, income for life in exchange for a gift of cash or marketable securities. There are some rules. The gift must be valued at $5,000 or more, and you may not receive the income until after your 55th birthday. The income you will receive varies depending on your age when payments begin. The benefits include possibly increasing your retirement income, reducing current income taxes, and reducing future estate taxes. You may name yourself and your spouse or another person to receive the income.

Charitable Remainder Trusts

Variations of this program are called a Charitable Remainder Unitrust or a Charitable Remainder Annuity Trust. Whatever the title, these programs pay quarterly interest to one or more people for life or a specified number of years. Eventually the amount remaining in the trust passes to Rutgers. An amount of $100,000 or more is recommended with this strategy, because each trust is a separate managed portfolio of investments, designed to meet your individual needs. The donor is entitled to an income gift and estate tax charitable deduction. The donor can avoid the capital gains tax by giving appreciated property or securities.

Charitable Lead Trusts

Lead trusts are the opposite of remainder trusts. Income from these trusts is paid to Rutgers for a term of years or a lifetime, and then the trust investments are returned to you or your family. Besides providing support to Rutgers, you can receive significant gift or estate tax deductions. Properly planned, this can enable you to pass on property that you expect to grow in value with little or no estate tax.

The Pooled Income Fund

This program is essentially a charitable remainder trust with many participants. It is similar to a mutual fund in that each donor receives a proportional share of the income generated by the investments. You must be 45 or older and willing to make an irrevocable gift of $5,000 or more to participate. You will receive a quarterly payment for the rest of your life. Other benefits include taking a charitable income tax deduction for a portion of your gift, the removal of your gift from your taxable estate, and all income from the fund is taxed as ordinary income. If your gift includes long-term appreciated securities, you will avoid a capital gains tax on that appreciation, so that the income you receive is based on the full value of your investments.

Rutgers In Your Will

No one can predict the future. Affecting the future is another matter and entirely possible. One way to introduce your ideals and goals to future generations is to leave a legacy gift to Rutgers. Perhaps you want to ensure that a certain research laboratory continues to have the most advanced equipment, or that bright – but financially strapped – students have access to scholarships. There are more than 1,500 distinct programs and projects at Rutgers. Or, you may wish to support Rutgers’ primary mission of excellence in education, research, and public service through a gift to the general fund. Whatever you select, you can be certain that a bequest to Rutgers will carry your goals forward.

Legacy gifts are among the most popular types of deferred gifts because of their great impact and because they are completely revocable. Should your circumstances or goals change, the bequest amount or ultimate designation can be easily altered. There are several ways to make a bequest to Rutgers. You and your attorney can decide which is best for you. A foundation representative would be happy to provide sample wording for your review and your attorney's opinion.

If you decide to include Rutgers in your will, please consider alerting the foundation in advance. This helps the university plan for the future and acknowledge donors while they are still living. You also become eligible for membership in the Colonel Henry Rutgers Society. Society members receive a seasonal newsletter featuring articles on Rutgers and financial planning tips. In addition, Colonel Henry Rutgers Society members are invited back to campus for an annual luncheon featuring a lecture by one of the university’s esteemed faculty. Members are also invited to special events around the country.

Giving Away Your Money and Keeping it Too

Under current tax laws, if you have an estate of more than $625,000 in 1998, your heirs face a significant tax burden on their inheritance. In some cases, making a substantial gift to Rutgers will protect, and possibly increase, what you are able to leave to your heirs. Here are three options. These strategies require an expert financial planner and usually a lawyer to set up. Jim Dawson, director of gift planning at the Rutgers Foundation, can get you started and will work with your advisor.

Charitable Lead Trusts

This very sophisticated strategy is also called a Charitable Annuity Lead Trust. The bare bones of it include setting up a trust that pays income to a nonprofit entity, such as the Rutgers Foundation, for a specific period of time. At the end of this term, the remaining assets in the trust are turned back to the donor or the donor's heirs. Depending on the circumstances, this arrangement may reduce or eliminate inheritance taxes and pass future appreciation on to your heirs unaffected by any taxes.

Charitable Remainder Trusts Combined with a Non-charitable Trust

This is another beneficial package. A Charitable Remainder Trust can provide you or your spouse with lifetime income. Combined with a non-charitable trust, such as a trust for a minor child or an educational fund for your grandchildren, it can help you advantageously distribute your assets.

Replacing an Asset with an Insurance Policy

This is a creative use of life insurance. Make a donation to Rutgers -- securities, real estate, cash, personal property, whatever -- and, with the tax savings, buy a life insurance policy for the value of the donation. Life insurance can pass without tax to your heirs. Remember, tax savings will vary depending on the type and circumstances of the gift.

Outright Gifts

Outright gifts are usually presented in one lump sum. The simplest is cash, or, with current technology, an electronic check or bank transfer. However, gifts of stocks and bonds, tangible personal property, real estate, and even life insurance can be considered an outright gift and may offer you significant benefits. Outright gifts can be made in your name or in honor or memory of someone else. Please note your preference at the time of the gift.

Stocks and Bonds

If you are holding appreciated securities and have owned them for longer than 12 months, there could be a tax advantage in giving them to Rutgers. These so-called "long-term" holdings will bring you a charitable deduction equal to their current fair market value. In addition, the capital gain is not recognized as taxable income. However, for short-term holdings (securities you have owned less than 12 months), you may be limited to a tax deduction for only the amount you paid originally.

Tangible Personal Property

A gift item directly related to Rutgers' broad mission of research, education, and public service -- for instance, the gift of a painting to the Jane Voorhees Zimmerli Museum -- is often fully tax deductible at its fair market value. Gifts not related to Rutgers' mission are deductible based on what you paid for the item. This is called a cost basis deduction. If you are interested in giving Rutgers some personal property, a foundation representative can help you sort out the differences.

Real Estate

Highly appreciated real estate can be a tax burden. Donating the property to Rutgers can bring tax advantages similar to that of donating appreciated securities. If you have owned the property for at least one year before giving it to Rutgers, you earn a charitable deduction equal to the full fair market value, less any outstanding mortgage. The property is also removed from your taxable estate. Options exist that allow you to give your home to Rutgers and continue to live in it or to derive a lifetime income from the property.

Life Insurance

If you already own a policy with a significant cash surrender value, you may be able to make a major gift without affecting your current investment or cash flow. For example, you may have bought a policy years ago when family needs were great. Now your children are on their own, and you no longer need that protection for them. The donation of an existing whole life policy will carry a charitable deduction of approximately the cash surrender value.

Commemorative Gifts

Commemorating a special person with a gift to Rutgers can be tremendously satisfying. It is a lasting tribute to a friend, colleague, or loved one and provides valuable support to New Jersey's leading research university.

A gift "in honor of" someone is usually made while that person is living, often for milestone occasions such as a graduation, promotion, birth of a child or grandchild, or retirement. A gift "in memory of" someone is the term used when the namesake is deceased. All these gifts are referred to as commemorative.

There are many ways to make a commemorative gift. All the financial strategies of gift planning apply, or you may choose to make an outright gift. As is the case with all gifts to Rutgers, you may designate the placement of your gift and will probably want to choose a program important to the gift's namesake. If you need help selecting a program, our school liaisons would be happy to help with suggestions.

You may even want to create a fund in someone's name. It may be a one-time fund or you and others can contribute to the fund yearly. Sometimes these funds are endowed. This means that your gift is invested and only the income will be used. An endowed fund usually requires a substantial gift in order to generate sufficient income. For specific information on endowments, contact Jim Dawson of the Rutgers Foundation's Department of Gift Planning.