Estate planning is the process of working with an attorney, accountant, trust officer, life insurance agent, or other advisor to establish an orderly and desirable arrangement for the disposition of your estate.
The primary objective in any plan should be the fulfillment of your wishes regarding the security of your family and others you wish to benefit.
Tax consequences, although secondary, are an important part of estate planning and are often directly related to the accomplishment of your primary goals. Planned gifts can enable donors to make a substantial gift to Tusculum University, while often retaining income for life or a determined number of years.
Charitable Gift Annuity (Immediate and Deferred)
The charitable gift annuity is a contract between Tusculum University and the donor. Tusculum University agrees to pay the donor (or other person(s) named by the donor) a lifetime annuity income in return for an irrevocable gift of cash, securities, or other personal property. The payment may continue for the life of a second individual, such as spouse or child. The annual payment is a fixed sum, the amount of which is based on the size of the gift and the number and ages of the beneficiaries. Payments from an immediate gift annuity will begin not later than one year from the date of the gift, while payments from a deferred gift annuity will not begin until a specified future date. The minimum amount for an annuity agreement is $10,000. Agreements shall be limited to two lives, and the minimum age for the annuitants shall be 60 for the immediate annuities. The minimum age for deferred payments to begin is age 60.
Charitable Lead Trust (with Tusculum University as Trustee)
A charitable lead trust is a trust in which the income or “lead” interest is paid to Tusculum University for a term of years, and the “remainder” interest is given to one or more non-charitable beneficiaries, who could be either the donor or family members. The amount paid to Tusculum University may be either a fixed sum (a lead annuity trust) or a percentage of trust assets as valued each year (a lead unitrust). The minimum amount for a charitable lead trust with Tusculum University as a trustee will be $100,000.
Charitable Remainder Trust (with Tusculum University as Trustee)
The charitable remainder trust is a separately administered trust established by the donor. It provides for payments to the donor and/or other named beneficiary(ies) either for life or a term of years (not exceeding 20), whereupon the remaining trust assets are distributed to one or more charities. These trusts may be established during life (“inter vivos”) or at death (“testamentary”). The minimum amount for a charitable remainder trust for which Tusculum University will serve as trustee is $100,000. Income beneficiaries must be at least 45 years of age unless the trust is for a term of years. The number of beneficiaries shall be limited to two where payments are to be made for the life of the beneficiaries. The maximum stated payout percentage shall be 8 percent. Tusculum University shall not serve as trustee of charitable remainder trusts for which there are charitable remainder interests other than Tusculum University and/or of which Tusculum University is not an irrevocable beneficiary.
Remainder Interest with Retained Life Estate
An individual may transfer to Tusculum University the title to a personal residence, farm or other real estate, and the donor or other persons named by the donor may retain the use of the property for a term of years or the life of the donor/other persons. The donor is entitled to a current income tax charitable deduction for the value of the gift. Tusculum University and the donor shall execute a contract that will stipulate the donor shall continue to be responsible for all real estate taxes, property insurance, utilities and maintenance. The agreement will also stipulate the donor may not sell, lease or otherwise transfer his/her interest to a third party without approval of Tusculum University .
A bargain sale is a sale of property (i.e., real estate, tangible property, or intangible property) for less than the property’s fair market value. The excess of the current value over the sales price represents the gift. The bargain sale price may be paid either in a lump sum or in installments for a term of years. The price paid for the property should not exceed 60 percent of its appraised value. No restrictions on the part of the donor may accompany the bargain sale.
The encouragement of bequests is one of the highest priorities of Tusculum University . A bequest may be of a specific sum, a percentage, or the residue of an estate, and may consist of cash, securities, life insurance proceeds, real estate, and/or personal property. A bequest may be made through a will or a living trust. A carefully planned and drafted will can preserve a maximum amount of an estate for the surviving members of one’s family and others, such as Tusculum University , whom he or she wishes to benefit. Under a living trust, the management of a person’s property is left to a trustee with instruction for distributions during the lifetime of the individual and at his or her death. These distributions may include charitable gifts, such as those to Tusculum University .
Life Insurance Policy
There are various methods by which a life insurance policy may be given to Tusculum University . To make such a gift, you would name Tusculum University irrevocable beneficiary of a life insurance policy and assign ownership of the policy to Tusculum University. For a paid-up policy, the donor’s income tax charitable deduction would equal the cash value of the policy, less any outstanding loans or other expenses against the policy. For a policy with outstanding premiums, the deduction would equal the interpolated terminal reserve value of the policy, less any outstanding loans or other expenses against the policy. Tusculum University may also be designated as the primary or successor beneficiary of a policy, but not the owner. The procedures for gift acceptance may vary depending on the nature of the donated policy.
Retirement Plan Designation
Donors are encouraged to designate Tusculum University as primary or contingent beneficiary of a retirement plan pursuant to their plan’s appropriate designation procedure. This designation may also be included as a specific bequest in the donor’s will or living trust document.
The importance of working with professionals in estate planning, making a will or establishing a trust cannot be overemphasized. Whenever desired, a development officer from Tusculum University will be available to consult with you and your attorney or other advisor, in order to ensure that your gift arrangement carries out your specific wishes.
It is the policy of Tusculum University to hold planned gift arrangements confidential unless we have your express permission to disclose such information. The Tusculum University Heritage Club was established more than a decade ago to recognize the generosity of alumni and friends who have made irrevocable estate commitments to Tusculum University , and we are proud to recognize members in annual publications.
Estate commitments are also recognized, with the donor’s permission, in the levels for cumulative lifetime giving.
Lifetime Giving Recognition
$1 million or more
Guarantors/Summa Cum Laude
$750,000 to $999,999
Guarantors/Magna Cum Laude
$500,000 to $749,999
$250,000 to $499,999
$100,000 to $249,999
We invite your questions concerning any of the matters outlined above. For additional information, please write or call:
Post Office Box 5040
Greeneville, TN 37743