Ways to Give - Life Income Plans - Charitable
Remainder Trusts
With
an irrevocable trust, a donor or a loved one can receive a fixed
annual income or an income that varies with the value of the
trust. At the death of the last income beneficiary, the assets in
the trust are distributed to the Foundation to be used as
designated by the donor. Trusts may be funded by gifts of cash,
securities or real estate and can frequently help donors solve a
particular problem or meet an important objective:
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To increase income through the conversion of
low yielding highly appreciated assets.
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To generate a significant income tax
charitable deduction and/or reduce potential estate tax
exposure.
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To diversify an investment portfolio with
professional management.
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To reduce or eliminate capital gains tax
exposure
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To make a gift to benefit the University of
Maine that might not otherwise be possible.
Here's how:
With the help of appropriate advisors, you
transfer property (cash and/or other assets) to a trust that is
created under applicable state and federal laws. You may specify
that payments from the trust be made to you and/or one or more
other persons for life. Alternatively, you may choose to receive
income for a period of time up to 20 years, or certain
combinations of lives and terms of years. The amount of income
received may be fixed at the time the trust is created or the
trust can be created in such a way that the income can fluctuate
over time with the performance of the assets in the trust. At the
end of the trust period, the property remaining in the trust
becomes the property of the University of Maine Foundation for the
purposes you designate. Because property transferred to the trust
will be used for charitable purposes in the future, gift, estate
and income tax deductions equal to the value of the gift portion
of the trust are allowed in the year of the gift.
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Example:
Mr. and Mrs. V., ages 61 and 62, are planning to retire in a few
years. They own substantial amounts of securities that they have
acquired over time. The securities are worth more than they paid
for them, but yield little or no income. Deciding that they
would like to convert the securities to income-producing assets,
they explore selling the holdings, but learn that they will owe
capital gains tax on the entire increase in value, leaving less
to invest for more income. They use a portion of their
securities to fund a charitable remainder trust. The trust can
sell the assets, pay no capital gains tax at the time of the
sale, and reinvest the entire net proceeds in a way that will
yield tax-favored payments. They are entitled to a charitable
income tax deduction in the year of the gift and are assured
that the amounts placed in the trust will be removed from their
estate for estate tax purposes. Mr. and Mrs. V. have provided
for management of their assets should they become incapacitated
in later years and gained great satisfaction in having funded a
scholarship fund for University of Maine students.
The University of Maine Foundation has
professional giving officers ready to work with you and your
advisors. We may be reached Monday-Friday between the hours of 8
am and 5 pm by calling 1-800-982-8503 or via email at
umainefoundation@maine.edu.
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