Planned Giving

Planned gifts are often used by themselves or part of an overall strategy to meet your particular financial, philanthropic, and estate planning needs. For more information, please contact Kevin Murray, Director of Gift Planning, at 434-243-9059 or kmurray@virginia.edu.

Revocable Gifts

Bequests: Unquestionably the most popular planned gift, a bequest allows you to make a gift through your estate while retaining the right to change your mind should conditions change. A bequest can be established through simple language in your will (or through a codicil to your existing will) such as the following:

“I bequeath to the Jefferson Scholars Foundation, a nonprofit organization located in Charlottesville, Virginia, the sum of $__________[or property described herein][or ____percent (%) of the rest, remainder, and residue of my estate] to be used pursuant to the (your name) Jefferson Scholarship Gift Agreement.”

Retirement Plan Assets: Leaving your retirement plan or IRA (or a portion of it) to the Jefferson Scholars Foundation is tax-wise. Through careful planning, you can preserve the value of your retirement plan assets by using them to make a charitable gift to the Jefferson Scholars Foundation. Any retirement plan assets you don’t use during your lifetime will be subject to income in the hands of your beneficiary. And in some instances, when combined with estate tax, as much as 70% of retirement plan assets can be consumed by taxes! Naming the Jefferson Scholars Foundation as recipient of your retirement plan assets can avoid all income and estate taxes on the plan assets.

Life Insurance: There are various incentives that can lead an individual to benefit the Jefferson Scholars Foundation with a life insurance policy. To leverage one’s giving, a young benefactor can use a portion of his or her annual gifts to pay premiums on an insurance policy that benefits the Jefferson Scholars Foundation. Or if an existing life insurance policy no longer serves the purpose for which it was created, it could be an ideal asset to transfer to Jefferson Scholars.

If a gift of life insurance is appropriate for you, the benefits can vary. By naming the Jefferson Scholars Foundation on your beneficiary designation form, you establish a revocable estate gift to the Foundation. Or if you decide to transfer ownership of the policy during your lifetime, you can receive a tax deduction generally equal to the cash surrender value of the policy as well as deductions for any subsequent premium payments you make on the policy.

Gifts that Generate Income

For those wishing to establish a gift to the Jefferson Scholars Foundation yet retain personal financial benefits, there are deferred giving vehicles that provide an income stream for yourself and/or others. Depending on the particular asset you wish to give, coupled with the type of income you wish to receive, a charitable gift annuity or charitable remainder trust may be of interest.

Gift Annuity: Typically funded with cash or appreciated stock, a gift annuity provides fixed lifetime income in return for your gift. The payout rate is determined at the time of your gift and is based on your age. So, for example, a 55 year old donor would enjoy a guaranteed payout of 5.3% for life, whereas a 75 year old donor would receive a payout of 7.1% for the same gift.

Charitable Remainder Trust (CRT): For those seeking income growth over the years, a CRT can provide variable income that increases with the value of the trust. Each year, the trust’s value is reassessed, and the income payments are adjusted accordingly. This means that if the trust grows, so does the income benefit. Conversely, if the value of the trust declines, the income payments fall as well. If UVa serves as trustee, the trust’s assets are allocated and invested within the University’s endowment. Through 2007, historical average annual returns over the last 10 years exceed fifteen percent (15%).

Life income vehicles can be an effective way to supplement your current income while enjoying favorable tax benefits. Much of the income through gift annuities or CRTs can be taxed at capital gains rates or even be tax-free! Income can also be deferred in order to generate a higher payout percentage and supplement income for retirement.

With gift annuities and CRTs, the Jefferson Scholars Foundation receives the remainder at the time the income stream ends. And in many instances, these gifts are used to create perpetual scholarships in the names of the donors who establish them.

Leveraging Gifts to Family

Charitable Lead Trusts: For those with large estates, a bequest to children of, say $1 million, can cost over $450,000 in federal estate tax, thereby leaving only $550,000 for the kids. To avoid this scenario, a charitable lead trust can effectively turn that $1 million into a multi-million gift with minimal or greatly reduced tax. Here’s an example:

Assets of $1 million are placed into a charitable lead trust for a set term, usually a period of years.
During this term, the lead trust is invested while paying a certain percentage of income to the Jefferson Scholars Foundation. As the trust investment performance outpaces the percentage of income paid to Jefferson Scholars, the trust value grows.
Tax implications, however, are determined at the time the lead trust is funded. Therefore, the IRS imposes tax on the value of the family’s interest in the trust when funded with $1 million. But because the family’s taxable interest is reduced by the value of the charity’s interest (i.e. you receive a gift tax deduction for the value of the charity’s interest), the family’s taxable interest is much less than $1 million.
At the end of the trust term, the remaining trust assets pass to the family and can easily exceed $2 million (depending on investment performance and the length of the trust term).
End Result: In addition to initial tax savings, trust growth passes tax-free to the family. And during the years of trust growth, the benefactor has endowed a Jefferson Scholarship with income distributions from the lead trust.