at the University of Illinois Springfield GIFT PLANNING IDEAS FROM THE UNIVERSITY OF ILLINOIS FOUNDATION
SPRING 2022 | ISSUE 98
Charitable Gift Annuity and Outright Gift Support Study-Abroad Opportunities For Lauren Huff (’21) traveling abroad to Spain while a student at the University of Illinois Springfield (UIS) was a way to improve her Spanish-speaking skills and gain knowledge she hoped would help in her future career.
Nancy Hahn (’81, MAS ’87) and Lauren Huff (’21)
Huff’s incredible experience was made possible by alumna Nancy Hahn (’81, MAS ’87) who established a fund to support study abroad with both a current and deferred gift. Hahn’s outright gift established the Nancy M. Hahn Fund, and her deferred gift created a charitable gift annuity (CGA) at the University of Illinois Foundation. This CGA will provide Hahn a charitable deduction and regular payments for life, and the remainder will benefit her scholarship fund.
For Huff, who has a bachelor’s degree in psychology and double minors in Spanish and anthropology, studying abroad was an opportunity to see cultural approaches to mental health treatment in Spanish communities. Her goal is to become a clinical psychologist and work with LatinX individuals in inpatient settings. Those are the types of benefits Hahn hoped students would have when she established this scholarship to support global education. Her own travel experiences taught her a lot—including how to speak French better, navigate airports, change currency, and adapt to new cultures. “I just wanted someone else to have the experience that I had that benefited me so greatly,” Hahn added. Huff is grateful to Hahn for recognizing the value of studying abroad. “I really believe that immersing myself in the language played an integral role in allowing me to achieve this goal and solidify my Spanish-speaking skills,” Huff added.
INSIDE • Have you heard? A CGA Can… A CRT Can… • Higher CGA rates create new charitable opportunities! • Student Spotlight • Create Your Illinois Legacy • Make a Gift Tax-Free with an IRA Qualified Charitable Distribution (QCD)
Huff is well on her way to achieving her career goal. She was recently assigned to a practicum site through her PsyD program where she will provide therapy to Spanishspeaking individuals.
READ ABOUT TWO WAYS YOU CAN MAKE A GIFT AND RECEIVE INCOME FOR LIFE HAVE YOU HEARD? A GIFT ANNUITY CAN … 1. Support an elderly parent with additional income Roger’s mother’s modest pension and Social Security are insufficient for her living expenses, and Roger has been making up the difference with a monthly stipend of $550. In his 32% tax bracket he must earn $809 pre-tax to pay the $550 subsidy. To provide for his mother, aged 82, in a more efficient manner and to support the University of Illinois Springfield, with which both he and his mother are affiliated, he decides to contribute $100,000 for a gift annuity, naming his mother as beneficiary. She receives $625 per month, most of which is tax-free, and her after tax income is a little more than Roger has been giving her. Roger realizes tax savings of $17,065 generated by his charitable deduction of $53,328. Although he makes a taxable gift to his mother, he pays no gift tax because of his lifetime gift-tax exclusion. Roger might have funded the gift annuity with appreciated securities instead of cash. He would have had some taxable gain, but it would have been more than offset by the charitable deduction—resulting in net tax savings. 2. Support other people you care about You may establish a gift annuity with the University of Illinois Foundation (UIF) to provide assistance for a sibling or for a nonfamily member such as a friend or for retirement income to a valued employee. 3. Supplement your future retirement income Joan, aged 50, would like to supplement her retirement income, so she contributes stock valued at $50,000 for a deferred gift annuity with payments to begin when she turns 67. She receives a current charitable deduction of $25,576 and can count on $4,500 per year when she turns 67. She also plans to establish additional gift annuities in upcoming years. 4. Provide income for yourself “just in case” Louise has more than enough income for now and is considering making a $100,000 outright gift to UIF for the benefit of the University of Illinois Springfield. She worries that her circumstances could change in the future. To make sure she has enough money “just in case,” she arranges with UIF a deferred gift annuity with a flexible beginning-payout date and elects to begin receiving income only if she needs it. Note: The examples are based on the new, increased gift annuity rates that become
effective on July 1, 2022. If the annuity is established prior to that date, the annuity amount and tax benefits will be somewhat different.
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AND A CRT CAN …
Q: I have heard that a charitable remainder trust can A:
pay you income for life and that you can also claim a major tax deduction when you create one. How does that work?
When you establish a CRT, you really create two separate and distinct interests in the same property. First, you create an “income” interest in the form of payments to you or other beneficiaries that you designate. Those payments can be made either for the life of the beneficiaries or for a term of up to 20 years. A beneficiary can be anyone you choose. Second, you create a “remainder” interest, which consists of the trust assets when the trust terminates. These remaining assets are distributed to one or more charities that you designate. For example, you might establish a charitable remainder trust that pays income to you for life and then distributes whatever remains in the trust to the University of Illinois Springfield. Because the remaining trust assets are irrevocably committed to charity, you are entitled to an income-tax charitable deduction.
Q: Is there more than one kind of CRT? A: Yes, there are two basic types. One is the charitable remainder annuity trust
(CRAT), which pays a fixed amount to the beneficiary or beneficiaries each year as long as the trust lasts. The other type is the charitable remainder unitrust (CRUT). Although the percentage a unitrust pays each year is fixed, that percentage is applied to the value of the trust principal as it changes from year to year. This variable payment provides some hedge against inflation—often making a CRUT a better choice than a CRAT if there is concern about keeping pace with a rising inflation rate.
To learn more about how these gift vehicles can benefit you and loved ones, contact a gift planning advisor in the UIF Office of Gift Planning and Trust Services at (217) 244-0473 or GPInfo@uif.uillinois.edu.
The information contained herein is offered for general informational and educational purposes. The figures cited in the examples and illustrations are accurate at the time of writing and are based on federal law as well as IRS discount rates that change monthly. State law may affect the results illustrated. You should seek the advice of an attorney for applicability to your own situation. Copyright © by Pentera, Inc. All rights reserved.
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Higher CGA rates create new charitable opportunities! Lock in guaranteed lifetime income with a gift annuity AND enjoy these additional benefits! • I mmediate income-tax savings • Avoidance of capital-gain tax • Convert risky stocks to • Tax-free income potential •H elp educate future generations guaranteed income
ONE LIFE Age Rate* 65
4.8%
TWO LIVES Ages Rate* 65–65
4.3%
70 NOT ENLARGE, 5.3%REDUCE OR 70–70 4.8% IMPORTANT: DO MOVE the FIM and POSTNET barcodes. The Special care must actual size AND placed 75 be taken to ensure 6.0% FIM and POSTNET 75–75 barcode are 5.2% to meet both USPS and automation compatibility standards. 80 regulations7.0% 80–80 5.9% 85
8.1%
85–85
6.9%
Charitable Gift Annuity Rates effective beginning July 1, 2022
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UNIVERSITY OF ILLINOIS FOUNDATION HARKER HALL MC-386 GIFT PLANNING AND TRUST SERVICES UNIVERSITY OFMC-386 ILLINOIS FOUNDATION HARKER HALL 1305 W GREEN ST URBANA IL 61801-9934
STUDENT SPOTLIGHT Artwork for User Defined (3.75" x 5") Layout: sample BRM Env with IMB.lyt April 29, 2011
“UIS provided me with a lot of great opportunities, but my study abroad experience was the most relevant in helping me solidify my sense of self and independence as well as my career goals. I am grateful for the Hahn scholarship.” —Lauren Huff, Class of 2021 Psychology and double minors in Spanish and anthropology Recipient of the Nancy M. Hahn Scholarship
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CREATE YOUR ILLINOIS LEGACY
Use this language to benefit the University through your will or living trust: I leave [$x/x%/# of shares/residue] to the University of Illinois Foundation, a nonprofit corporation (Tax ID 37-6006007) located in the State of Illinois, to support the University of Illinois Springfield [optional—program/department/college]. Use this language for an account controlled by a beneficiary-designation form: University of Illinois Foundation fbo University of Illinois Springfield [program/department/college] Tax ID#: 37-6006007 Attn: Gift Planning and Trust Services 1305 W. Green Street Urbana, IL 61801 Contact us to ensure your specific language can be honored as you intend.
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Please send me a complimentary copy of your new guide(s): n T he Charitable Gift Annuity: 12 Ways It May Benefit You n Enhance Your Financial Security with Effective Use of Charitable Remainder Trusts n I already have included, or am considering including, the University of Illinois Springfield in my estate plan and would like to discuss my options. You can also download these materials at uis.giftplans.org/guides
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Do you have questions or need a template letter to initiate your distribution? Contact UIF’s Office of Gift Planning and Trust Services at (217) 244-0473 or GPinfo@uif.uillinois.edu.
• You must be 70½ or older at the time you make your distribution. • The transfer must go directly from your IRA custodian to UIF. • Your total QCDs cannot exceed $100,000 annually. • Your distribution cannot include any secondary benefits, like funding a split-income gift or ticketing advantages.
To qualify:
• Is easy (your IRA custodian has a form for you to use). • Is tax free (its amount is excluded from your gross income). • Counts toward your required minimum distribution.
A QCD to UIF for the benefit of the University of Illinois Springfield:
Make a Gift Tax-Free with an IRA Qualified Charitable Distribution (QCD) Office of Gift Planning and Trust Services University of Illinois Foundation 1305 W. Green St., Rm. 214 Urbana, IL 61801-2962
uif.giftplans.org
Justin Seno Director of Gift Planning University of Illinois Foundation (217) 244-8273 jtseno@uif.uillinois.edu
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