Planned & Deferred Giving
Planned and deferred gifts are the result of careful planning that integrates a donor’s charitable gift into his or her overall financial, tax and estate planning objectives so as to maximize benefits for both the donor and the College of Architecture, Design, and Construction. Planned gifts typically come from a donor’s assets rather than income and can be outright gifts, deferred gifts or a combination of the two. Planned gifts play an integral part in the future of the college. We are very grateful for our alumni and friends who have assured our future through their planned gifts.
Deferred Giving
Deferred gifts are the result of careful planning that integrates a donor’s charitable gift into his or her overall financial, tax and estate planning objectives so as to maximize benefits for both the donor and the College of Architecture, Design, and Construction. Planned gifts typically come from a donor’s assets rather than income and can be outright gifts, deferred gifts or a combination of the two.
Each of the deferred giving instruments summarized below is closely regulated by law and requires special arrangements and tax treatment. More information is available in the Foundation’s brochure, A Guide to Planned Giving, and in consultation with the College’s Development Office.
Bequest in a Will or Living Trust
A bequest is a gift made through a will or living trust. The College of Architecture, Design, and Construction/Auburn University Foundation is often named beneficiary in the wills and living trusts of College alumni and friends. Bequests may be stated as a percentage of the estate, as the residual of the estate or a specific dollar amount. Since a will can be changed, no income tax benefits are associated with a bequest; however, the donor’s estate is reduced by the amount of the bequest for estate tax purposes.
The drafting of your will or living trust should be arranged with your attorney. The College’s development representatives are available to confer with you and your attorney in drafting the appropriate bequest clauses.
Life Income Gifts
Increasingly popular methods of giving are the two basic types of charitable remainder trusts - the charitable remainder annuity trust and the charitable remainder unitrust. Both can be funded through a gift of stock, cash or other assets during a donor’s lifetime or through a testamentary disposition. Both provide life income for the donor and/or designated beneficiary(ies). The donor may claim a tax deduction for the estimated portion of the assets that will ultimately go to the Foundation. The assets of the trust are available for future use by the Foundation for the designated purpose(s).
Charitable Remainder Annuity Trust
A good choice for those who want to make a gift that furnishes a predictable yearly income, the annuity trust pays a fixed dollar amount annually to the beneficiaries based on a percentage of the trust’s initial value. This amount cannot change during the life of the trust. Unlike the unitrust, the annuity trust allows no additional contributions, although you can establish additional annuity trusts with the Foundation/College. An income tax deduction is allowed for an amount equal to the present value of the College’s remainder interest in the trust.
Charitable Remainder Unitrust
In this case, the donor transfers cash, real estate or securities to an irrevocable trust that provides yearly, fluctuating income to the donor or other beneficiaries for a specified term or for life. Trust assets are revalued annually, allowing potential growth in income to the beneficiaries. Additional contributions can be made to the trust. Upon the death of the final beneficiary, the charity receives the principal and distributes it according to the donor’s wishes. An income tax deduction is allowed for an amount equal to the present value of the Foundation’s remainder interest in the trust.
Charitable Gift Annuity
The charitable gift annuity is a contract between the Auburn University Foundation and the donor whereby the Foundation promises to pay a fixed annuity to a maximum of two beneficiaries (beginning immediately or deferred to a later date) in exchange for the irrevocable transfer of assets by the donor to the Foundation. Annuity payments are based on the initial market value of the assets contributed and the ages of the income beneficiaries. A portion of the annuity payment may be considered a tax-free return of principal. An income tax deduction is allowed for the difference between the value of the gift and the present value of the annuity.
Deferred Gift Annuity
Like a standard gift annuity, a donor makes a gift now and receives an immediate income tax deduction; however, the donor begins receiving the annuity payment at a future, predetermined date. Because of compounding between the date of gift and the first annuity payment date, the amount of the annuity payment can be significant and at a much greater rate than of the standard charitable gift annuity.
Retained Life Estate
A donor may transfer a personal residence or a farm to the Auburn University Foundation, while retaining the right for the donor and spouse to live there for life. The donor will be entitled to a charitable income tax deduction for a portion of the appraised fair market value of the property at the time of the transfer. In addition, the donor escapes capital gains tax on the property’s appreciation, and his or her estate will be entitled to a charitable gift annuity.
Retirement Accounts
A donor can name the College of Architecture, Design, and Construction /Auburn University Foundation as primary beneficiary of a retirement account with the value being fully deductible for estate tax purposes. Furthermore, income in respect of a decedent (IRD) is avoided since the Foundation is a tax-exempt entity. IRD is taxable to no-charitable beneficiaries, even if no estate tax is due.
Life Insurance
Life Insurance can become a gift more valuable than the actual money expended when the policy is given to the College of Architecture, Design, and Construction /Auburn University Foundation (AUF), which is named as the beneficiary. Three different giving opportunities are available with life insurance. First, a donor can contribute a “paid up” policy to the Foundation and receive an income tax deduction equal to the policy’s cash/replacement value. Second, a donor can name the Foundation as primary beneficiary of the policy, resulting in estate tax savings, but no income tax deduction. Third, a donor can name the Foundation as owner and beneficiary of a new policy and receive an income tax deduction for an annual gift in the amount of the premiums, which the AUF pays.
Charitable Lead Trusts
With a charitable lead trust, the College of Architecture, Design, and Construction /Auburn University Foundation receives the income from the donor’s assets for a specified time, after which the asset is transferred back to the donor or to the donor’s heirs. A lead trust can reduce gift and estate taxes or provide a charitable deduction for the donor.
As with all major financial decisions, you should consult with your attorney and financial advisors if you decide to make a planned gift to Auburn University. If you and your advisors would like further information, you can request planned giving information in confidence and without obligation from our offices.
George Petrie Society
Created in 1998, the George Petrie Society recognizes donors who have included a gift to Auburn University in their will or estate plan. Types of planned gifts include life income plans (such as charitable remainder trusts and charitable gift annuities), life insurance gifts, designation of a remainder interest in a donor’s residence or real estate, or bequests made through a donor’s will. Members of this society are honored at the biennial induction ceremony and reception.
Dr. George Petrie (1866-1947), best known for his authorship of the Auburn Creed, demonstrated remarkable dedication and generosity toward Auburn University. Petrie boasted a career at Auburn that spanned half a century and exhibited a deep and abiding interest in intellectual and physical fitness. This legendary man served as Auburn’s Academic Dean and founder of the University’s football and tennis programs. His creed has provided unforgettable words of inspiration for generations of Auburn students, alumni, and friends. Through the institution of the George Petrie Society, Dr. Petrie’s spirit of philanthropy and love for Auburn will be reflected and perpetuated by benefactors who establish bequests and planned gifts to the University.
To become a member of the George Petrie Society, simply notify the Office of Planned Giving that you have included the Auburn University Foundation in your will or estate plan.
The College of Architecture, Design, and Construction has many generous donors who have provided for the College through an estate gift.