10 taxwise ways to invest in UD

Volume 11, Number 3, 2002

CASH-deductible up to 50 percent of adjusted gross income, if you itemize deductions.

REAL ESTATE OR SECURITIES (held long-term)-deduction is based on the asset's full market value; capital gains tax is avoided on the property's increase in value. Your broker can transfer securities to UD or you can send unsigned stock certificates and signed stock power (Medallion guaranteed signature). If you endorse the certificates on the back, no stock power is required, but signature must be Medallion guaranteed by a broker or appropriate bank officer.

LIFE-INCOME GIFTS-income paid to you, your spouse, or another designated person. You get a charitable income tax deduction (if you itemize) and you avoid capital gains tax on the sale of the donated assets.

Pooled Income Fund Gift-securities or cash are transferred to Pooled Income Fund and invested. You receive your pro rata portion of earnings.

Charitable Remainder Trusts-cash, securities or debt-free real estate are transferred to an irrevocable trust that pays you fixed or variable income-usually for life.

Charitable Gift Annuities-cash or securities are transferred to UD in return for a fixed annuity for life. The transaction is partly a charitable gift and partly the purchase of an annuity. Income can begin immediately or later.

HOME OR FARM GIFT-deed a personal residence or farm to UD, but retain the legal right to live there for life. A substantial income tax deduction is generally available immediately with potential estate tax savings at your death.

BARGAIN SALES-sale of assets to UD at a less than fair market value. The difference between the fair market value and the selling price is a charitable gift. A pro rata portion of any capital gains tax is avoided.

BEQUESTS-unlimited charitable deduction reduces federal estate and any state inheritance tax. Charitable bequests can be for specific dollar amounts, specific property, or all or part of the residuary estate. Contingent bequests name UD to benefit where named beneficiaries are deceased.

REVOCABLE LIVING TRUST-UD can receive a specific amount of cash, a specific property or all/or a percentage of trust assets.

TANGIBLE PERSONAL PROPERTY-(i.e., works of art, antiques or books)-deduction is based on fair market value, providing UD's use of the property is directly related to its educational function. Otherwise, the deduction is based on the lesser of cost basis or fair market value.

LIFE INSURANCE-UD is designated the beneficiary; no income tax deduction unless UD is also made owner of the policy. Additional income tax deductions available for donor's payment of any future premiums.

CHARITABLE LEAD TRUSTS-assets transferred to an irrevocable trust, which then makes payments to UD for a stated term. Trust assets can be returned to you at the end of the trust or pass to other individuals you designate, such as younger family members. Reduces gift or estate tax on gift to other family members.

For confidential assistance or information in these taxwise ways to invest in the University, please contact Paula M. Armstrong, Esq., Director of Planned Giving at (302) 831-2104.