Life income gifts can help you prepare for the future—from planning your own retirement security, to ensuring the smooth execution of your estate. Receive 100% individual and class reunion gift credit!
Did you know that Wellesley now offers an endowment investment option for charitable remainder unitrusts? If you create a charitable remainder unitrust with the College as the sole trustee and remainderman, then you can choose to invest your trust along with Wellesley's endowment. If you're interested in more information, see our section on charitable remainder trusts and read through the frequently asked questions about this endowment investment opportunity.
Did you also know that now is the perfect time to create a charitable lead trust? Historically low IRS discount rates provide a wonderful opportunity to make a gift to Wellesley and transfer assets to your heirs—with significantly reduced tax consequences. Interested? See below for our section on charitable lead trusts.
From planning your own retirement security to ensuring smooth execution of your estate, life income gifts help you prepare for the future and allow you to receive 100% class and gift credit!
In this section:
See also: Retirement Planning Frequently Asked Questions
Gift annuities are among the most straightforward and rewarding
donations that you can make to Wellesley. Gift annuities work this way:
You make a gift of securities or cash, and Wellesley sends you a
guaranteed payment every quarter for the rest of your life. With a
minimum gift of $10,000, you can establish a gift annuity.
Features of a charitable gift annuity include:
- Support for Wellesley College
- Fixed income for life (a portion of which may be tax-free)
- Backed by the assets of Wellesley College
- An immediate one-time charitable income tax deduction for a portion
of your gift (in the year of the gift)
The annuity income paid to you is based on rates that
reflect actuarial assumptions. For example, a 65-year-old
donor/beneficiary is eligible for a 4.7% annuity rate, meaning that a
gift of $10,000 will provide a fixed annual income of $470 for life.
College Gift Annuity Rates (effective as of October 2015)
annuity income paid to you is based on rates that reflect actuarial
assumptions. For example, a 65-year-old donor/beneficiary is eligible
for a 4.7% annuity rate, meaning that a gift of $10,000 will provide a
fixed annual income of $470 for life.
Offering shelter from capital gains taxes and a steady stream of income, pooled income funds are ideal for people who wish to give highly appreciated securities.
Features of pooled income funds include:
- Support for Wellesley College
- Income for the life of a beneficiary
- Choice of professionally managed funds with a variety of investment goals
- A one-time charitable income tax deduction for a portion of your gift (in the year of the gift)
- Avoidance of capital gains tax
Wellesley offers three pooled income funds with different investment objectives. Each requires a minimum gift of $10,000 (additions of at least $2,500 are allowed to existing accounts).
The Wellesley College High Yield Fund
- Invested primarily in bonds and other fixed-income securities with the goal of maximizing current income
- Beneficiary should be at least 65 years old
- Current estimated annual rate of return is 3.96%
The Wellesley College Balanced Fund
- Invested in a "balanced" portfolio to provide both current income and growth
- Beneficiary should be at least 55 years old
- Current estimated annual rate of return is 3.24%
The Wellesley College Growth Fund
- Invested primarily in stocks
- Seeks to create asset growth and increased value of holdings (rather than current income)
- Beneficiary should be at least 45 years old
- Current estimated annual rate of return is 1.86%
This gift option is the opposite of a charitable remainder trust. A donor places assets in a trust to generate annual income for Wellesley College, usually for a fixed number of years. When the term of years ends, the trust terminates and the assets pass to the donor’s heirs.
Features of a charitable lead trust include:
- Provides initial annual support for Wellesley College
- Allows you to transfer assets to your heirs with sharply reduced gift and estate taxes
- Can be established either during your lifetime or through your estate plan
Assets Information: Cash, Securities, and Real Estate
Cash is the easiest of all assets to transfer in order to fund a life income gift to Wellesley College. Ordinarily, the receipt of your check by the College concludes the transaction with the postmark on your envelope as your official date of gift. A life income gift (such as a charitable gift annuity or a pooled income fund) is likely to provide higher income than either a certificate of deposit or a savings account.
Many donors who own highly appreciated securities are reluctant to sell because of the capital gains tax on the appreciated portion of the assets. Using securities to fund a life income gift is a way to avoid incurring up-front capital gains tax liability.
In reviewing their assets, donors often find that real estate, whether their primary residence or vacation home, has appreciated more than their other assets. A gift of real estate to Wellesley College can offer significant benefits to both the donor and the College. There are several options for making a real estate gift:
- Outright Gift of Real Estate: A gift to the College results in a charitable income tax deduction based on the fair market value of the property at the time of the gift. In addition, the donor is able to avoid any capital gains tax liability.
- Life Income Gifts of Real Estate: A gift of real estate can be structured to provide a life income (usually through a trust). Whatever gift vehicle is chosen, the donor enjoys a charitable income tax deduction (for a portion of the gift's value) in the year the gift is made.
- Gift of Real Estate with Retained Life Estate: A donor may decide to make a gift of her principal residence or vacation home to the College and retain the right to live in the house for her lifetime. The donor receives a charitable income tax deduction for a portion of the fair market value of the home in the year of the gift and retains rights and duties of ownership for life.
Wellesley has suggested guidelines to ensure that real estate gift transfers go smoothly: property should be readily saleable so that the College does not incur undue carrying expenses; a qualified appraisal must be provided by the donor to substantiate the value of the property; and the real estate should be mortgage-free.
For more information, contact the Office of Gift Planning at firstname.lastname@example.org or 800.358.3543