Planning Your Gift 3 Furthering Wheaton s Mission 4 Planning Your Gift

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1 Planning Your Gift

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3 Planning Your Gift 3 Furthering Wheaton s Mission 4 Planning Your Gift 5 What to Give 5 Marketable Securities 5 Real Estate 6 Cash 6 Retirement Plan Assets 7 Business Interests/Closely Held Stock 7 Life Insurance 8 Tangible Personal Property 11 Ways to Give 11 Life Income Gifts 11 Charitable Gift Annuity 14 Charitable Remainder Trust 17 Pooled Income Fund 19 Gifts at Death 19 Bequests 20 Bequest Language 21 Charitable Lead Trust 22 Donor Advised Fund 24 Remainder Interest in Personal Residence or Farm 24 Charitable Bargain Sale 25 Flexible Endowment 25 Revocable Gifts 25 Revocable Trust 26 Charitable Investment Trust 27 Gifts at a Glance 29 Trust Company 31 The Blanchard Society 33 How We Can Help You 33 Estate Analysis Services 33 Contact Us 35 Our Promise to You 1

4 Furthering Wheaton s Mission The mission of remains constant: to help build the church and improve society worldwide by promoting the development of whole and effective Christians through excellence in programs of Christian higher education. Wheaton s viability as an emphatically Christ-centered school depends on its dedicated supporters using their God-given resources to help sustain Wheaton s mission. Wheaton relies on its supporters and their confidence in the College s trustworthy stewardship. At, planned gifts have been instrumental in this legacy of stewardship for over 100 years. The College s long history of planned giving is rooted in Wheaton s traditional concern to provide its friends and supporters a variety of techniques and strategies to support the College s ministry. Planned gifts encompass everything from outright gifts of property to gift annuities, charitable trusts, revocable trusts, Wills, and other estate planning devices. Wheaton also provides opportunities to its supporters to benefit other Christian ministries. The following pages explain how you can partner with us in furthering Wheaton s mission while at the same time accomplishing your financial and charitable goals. We are here to assist you each step of the way. If you have any gift or estate planning questions, please contact us in Gift Planning Services or your Regional Director of Development at or gift.plan@wheaton.edu. You can also visit our website at giving.wheaton.edu. 2 3

5 What to Give The following are assets that you can give to support the ministry of. You may also want to refer to the section A Word on Taxes, inserted in the back cover for tax details relating to such gifts. Marketable Securities Publicly traded stocks, bonds, and mutual funds can be gifted to. As long as the specific security has been held by you for longer than one year, you will receive an income tax deduction for the full fair market value of the gift while avoiding any capital gains tax on the appreciation of the security. (Note: Gifts of marketable securities held by you for a year or less will yield an income tax deduction for only your tax basis in the security.) For instructions on transferring stock to, please refer to information inserted in the back pocket of this brochure. Combining gifts of marketable securities with charitable remainder trusts (see page 14), charitable gift annuities (see page 11), or the Donor Advised Fund (see page 22) can provide you with additional planning options. Planning Your Gift We hope you will find the following descriptions of our gift planning vehicles helpful in determining the opportunities that best fulfill your personal, financial, and stewardship goals. Real Estate For generations, has assisted donors with gifts of improved, unimproved, commercial, residential, and agricultural real estate. Wheaton offers flexible and innovative giving opportunities for gifts of real estate. You can give your entire interest in real estate, or you can contribute less than your entire interest where you and Wheaton become co-owners and share in sale proceeds according to applicable ownership percentages. Wheaton s professional staff will work closely with you and your advisors to ensure a smooth transfer and sale of the property. 4 5

6 Retirement Plan Assets Donor Testimonial: Tom and Sue Standlee Tom and Sue Standlee are proud parents of graduate, Corinna Standlee Rodriguez 98. Several years ago, the Standlees asked that Wheaton help them realize two estate planning goals: an income for Sue at Tom s death and an eventual gift of a portion of their estate to further the Lord s work at Wheaton College. We wanted both a reliable, hassle free retirement income for Sue in her later years, they say, and a means to support the Christian ministry at. To do this, the Standlees dedicated a portion of their IRA assets to fund a Wheaton College charitable remainder unitrust at Tom s death. The unitrust is tax exempt; therefore, no income taxes will be incurred on the transfer of their IRA assets to the trust and the trust s investments will grow tax free. Wheaton s gift planning staff worked closely with Tom and Sue s attorney to set up the trust. Trust Company will serve as trustee of the unitrust and will handle the trust s investments and administration as well as pay the trust s income to Sue for the remainder of her life. Tom and Sue are convinced that God has been faithful to and He will continue to work through its ministry. We are pleased to be able to provide for the College s needs through our estate planning, they say. We pray that God will be glorified by Wheaton s administration of our gifts as we continue to support the College with our gifts and prayers. You are entitled to a charitable income tax deduction for a gift of real estate to. You can avoid capital gains taxes at the time of the gift and subsequent sale of that property. However, you may incur capital gains taxes at the time of the sale of the property if the gift and sale are not handled properly (for instance, if the property has a mortgage at the time of the gift or if the gift occurs after you have already committed to sell the property). Thus, it is important to consult with Wheaton and your advisor early in the process as you consider your gift. Wheaton and your advisors can help guide you to ensure IRS requirements are met and that you receive the maximum tax benefits from your gift. Gifts of real estate can be combined with gift planning techniques such as charitable remainder unitrusts (see page 16), charitable lead trusts (see page 21), a remainder interest in a personal residence or farm (see page 24), and the Donor Advised Fund (see page 22) to provide you with life income or other tax and financial benefits. Cash Gifts of cash are the simplest and easiest to make. They can fund most gift planning vehicles, including gifts that provide lifetime income. Your cash gift will qualify for a charitable income tax deduction, subject to applicable income tax contribution limitations. Retirement Plan Assets Tax-deferred retirement plans, such as IRA, 401(k), and 403(b) accounts may represent a large portion of your estate assets, and thus can be a major factor in your planning. Income tax is deferred on these assets. Thus, if the transfer of retirement accounts to surviving family members is not handled properly, your retirement assets could be subject to both heavy income and estate taxes at your death. To avoid this tax pitfall, many individuals give retirement plan assets to. Since Wheaton is tax-exempt, the retirement plan assets avoid both estate and income taxes, thus preserving all of the assets for the support of the College s ministry. The most direct way to make a gift of your retirement account to is to designate Wheaton College as a beneficiary on the account s beneficiary designation form. In that way, account assets will be distributed directly to at your death and will avoid any taxation. Your retirement plan assets can also be used to fund a charitable remainder trust. The charitable remainder trust can provide an attractive way to avoid income tax consequences at the time the IRA assets are distributed to the trust, provide income to family members after your death, and still provide a significant gift to. If, at your death, assets from your IRA or other retirement plan will first be distributed to your probate estate or revocable trust before being distributed to, you can provide in your Will or trust that charitable distributions are to be made first from the retirement plan assets before any other assets are used. By making such provisions, your estate or trust will avoid any taxation on the retirement plan assets distributed to Wheaton at your death. Business Interests/Closely Held Stock Family businesses offer unique opportunities for giving to. Whether your business interest is in the form of stock in a C Corporation or S Corporation, or is an interest in a limited liability company, general partnership, or limited partnership, Wheaton s knowledgeable gift planning staff can help educate, inform, and guide you as you explore those opportunities. Wheaton s gift planning staff may give you fresh ideas or identify solutions to business planning problems which you can then review with your advisors. In most cases, taking advantage of charitable gift planning opportunities depends on careful planning before a taxable event, such as a sale, takes place. The sale of business interests can present difficult tax issues. Whether you are selling your business or business interest to a third party, a family member, or back to the company (redemption), charitable planning can help avoid capital gains taxes, provide valuable tax deductions to offset gain from the sale, provide a way to get cash out of a company, tax-free, or even provide you with significant lifetime income through a charitable remainder trust. Life Insurance welcomes gifts of life insurance. You may own a life insurance policy which was issued at a time in your life when you needed the insurance to provide for loved ones in case of unexpected death, and which provides no current economic benefit to you. You can contribute significantly to the ministry of Wheaton by naming the College as sole owner and beneficiary of such a policy. 6 7

7 If the policy is fully paid up, (you no longer pay premiums on the policy) your income tax deduction will equal the replacement cost of the policy. If the policy is partially paid up, your deduction will generally equal the lesser of the replacement cost of the policy or your tax basis (premium paid less dividends received). You can also name as the beneficiary of your life insurance policy while retaining ownership of the policy. Although this option will not result in any immediate tax deduction, it does provide for a substantial contribution to at your death. Tangible Personal Property is pleased to accept gifts of tangible personal property, such as antiques, coins, jewelry, and valuable artwork. The College will normally sell such items and apply the proceeds to its ministry. In such cases, your charitable income tax deduction will be your tax basis (usually your cost) at the time of the gift. In some circumstances, the College will be able to use the item in its operations. (Example: a gift of artwork used for display or instruction in the Art Department.) In these situations, your charitable income tax deduction will equal the fair market value of the item at the time of the gift. Bill and Suzanne Johnson For many years, Bill Johnson 63 owned and operated the family business, Rhoads and Johnson Construction. As he approached retirement, Bill wound down the operations of the company so that eventually the only asset still held by the company was a significant amount of cash. Because the company was legally structured as a C Corporation, it could not distribute this cash to Bill (as sole shareholder) without Bill being heavily taxed on the distribution. Working with and their professional advisors, Bill and his wife, Suzanne, decided on a solution which fulfilled their stewardship goals and proved to be a great business decision. Bill transferred all of his stock to a charitable remainder unitrust, and Wheaton, as trustee, then exchanged the stock for the cash. Because of the tax exempt nature of the unitrust, no taxes were incurred on the exchange. Bill was thus able to avoid substantial taxes on the liquidation of the company, and he also received a significant income tax deduction for the contribution of the stock to the unitrust. In addition, Bill and Suzanne began receiving annual retirement income from the unitrust. This income has increased over the years due to Trust Company s strong investment performance. Bill has compared the unitrust s investments to his own investments, The returns are excellent and meet or exceed the return on our other assets. The Johnsons unitrust provided retirement income and a taxfree solution for closing their business, but it also allowed them to contribute to Wheaton s unwavering mission of training people to be servants for Christ and His Kingdom. Bill and Suzanne do not feel that leaving large inheritances to children is always a wise choice, so at their deaths, they envision their trust assets endowing a scholarship for missionary children to attend. The Johnsons summarized their motivation for setting up the unitrust, We felt that it was a great way to give back to God what he had already given to us. The amount was greater than we had ever imagined being able to give Business Interests Donor Testimonial: 8 9

8 Ways to Give makes the following gift planning vehicles available to you to facilitate, enhance, and encourage your gifts to as well as to other Christian ministries. We hope we can assist you in using these tools to meet your gift planning needs. Life Income Gifts Charitable Gift Annuity For over a century, gift annuities have been a popular charitable option for alumni and friends. They generate life-long income, paying you an annual, semiannual, or quarterly fixed annuity payment for the rest of your life. As a gift annuitant, you can have confidence that your annuity will be paid without interruption because of the College s financial stability and its one-hundred year history of faithfully meeting its annuity obligations. You will also have the satisfaction of knowing that a portion of your gift annuity contribution will be used for the ministry needs of the College. g i f t s o f c a s h o r marketable securities g i f t Charitable Gift Annuity donor Gift Annuity income tax deduction lifetime fixed income 10 11

9 Benefits of a Gift Annuity Partial income tax deduction at time of contribution Fixed lifetime income Partially tax-free income Deferral and partial avoidance of capital gains taxes (for gifts of appreciated securities) Significant gift for Wheaton s ministry Gift annuities can be funded with a contribution of cash or marketable securities. With a gift annuity, you will receive a current tax deduction, which is determined by your age, the annuity rate, and the amount of your contribution. The annuity rate is also based on your current age. The following are examples of various strategies by which a gift annuity may help you accomplish your financial and charitable objectives. Current Gift Annuity. You immediately begin to receive annuity payments, which provide an ideal supplement to retirement income. You can also dispose of appreciated securities and, thereby, avoid and defer capital gains taxes. Deferred Gift Annuity. You can begin making contributions to a deferred payment gift annuity during your working years and begin receiving annuity payments upon your retirement. You can even decide to continue deferring the annuity payments at retirement from year to year and receive a higher rate of payment for each year you defer the payments. This is referred to as a flexible deferred gift annuity. By making contributions to a deferred gift annuity at a younger age, you receive an immediate income tax deduction when your income may be highest, and you receive payments when additional income may be needed. Burr Hickman Burr Hickman 52 describes Wheaton s music ministry as vibrant and visible, on and off campus. As a student in Wheaton s Conservatory of Music, Burr was personally influenced by that music ministry and by Wheaton s emphasis on the liberal arts. He received an education which went beyond the classroom and the College s music curriculum., says Burr, has instilled the attitude For Christ and His Kingdom in my daily walk and my goals for life. Burr wanted to see the spiritual development and the love for the liberal arts that he experienced perpetuated in the lives of Wheaton students today. He found that a current gift annuity was the perfect tool to do just that. Burr s gift annuity provides valuable support for Wheaton while providing Burr with an immediate income tax deduction and a reliable source of fixed, lifetime income. Burr realizes the widespread impact his gift can have. has a perpetual outreach, he says, far beyond a donor s perception both in time and place. Its firm stewardship bears witness to this commitment. Burr s gift annuity not only provides him with tax and financial benefits, but also helps the College in its work of equipping Christian servants to carry out the Lord s purposes worldwide. Charitable Gift Annuity Donor Testimonial: 12 13

10 Deferred Gift Annuity Donor Testimonial: Cadmus and Elizabeth Hicks Working in the financial services industry, Cadmus Hicks 74 understands the need to prepare financially for the future. And while he finds it necessary to set aside resources to meet legitimate future needs, he and his wife, Elizabeth 77, have entrusted a portion of their assets to in the form of a charitable deferred gift annuity. The deferred gift annuity provides support for and a future stream of lifetime income for Cadmus and Elizabeth. The assurance that will provide us with a predictable stream of income for retirement, says Cadmus, undermines the rationale for accumulating as many assets as possible due to concern that future rates of return may be lower than expected. The gift annuity also gave the Hicks an immediate income tax deduction, and, since they discussed their gift of appreciated stock with Wheaton s staff prior to funding their gift annuity, they learned how to minimize future tax burdens and maximize capital gains tax advantages. The Hicks deferred gift annuity fulfills their intention of providing Wheaton students with an outstanding, Christ-centered education. For us, says Cadmus, it is important that a education be affordable to a wide range of students while at the same time offering high quality facilities and equipment. Residence Gift Annuity. In certain situations, may accept a contribution of a remainder interest in a residence or farm in exchange for a gift annuity. A remainder interest is an arrangement whereby Wheaton receives the right to use and own the property at your death, yet you continue living in the residence during your life, even as you receive lifetime annuity payments. Charitable Remainder Trust The charitable remainder trust is one of the most versatile tools in charitable gift planning. There are two basic types of charitable remainder trusts: the charitable remainder unitrust (unitrust) and the charitable remainder annuity trust (annuity trust). Both trusts offer the unique tax planning benefit of being tax exempt. You can transfer appreciated property to one of these trusts, and the trust can sell the property without any recognition of capital gains taxes at the time of sale, reinvest the undiminished sale proceeds in a diversified portfolio, and pay income to you for your life or for a term of years. In addition, you receive a current income tax deduction for the economic value of Wheaton s right to receive the trust proceeds at your death. This deduction amount is based on the ages of the income beneficiaries and the amount of the payout. Because of these tax advantages, the sale and reinvestment of property within a charitable remainder trust can be a very attractive alternative to a typical outright sale of appreciated property. Charitable Remainder Trust g i f t s o f c a s h, securities, or real estate donor Charitable Remainder Trust income tax deduction variable or fixed income at d e at h o f d o n o r, t r u s t a s s e t s d i s t r i b u t e d t o w h e at o n college a n d possibly o t h e r christian ministries 14 15

11 Barrett and Regis Anderson After 40 years of owning rental properties in the San Francisco Bay Area, Barrett Anderson 50 and his wife, Regis, decided it was time to get out of the real estate rental business. Combining their stewardship goals and tax and investment objectives, the Andersons contributed their highly appreciated apartment buildings to fund two Wheaton College charitable remainder trusts. Barrett strongly believes in the benefits of these trusts. He says they provide,...a near perfect solution for anyone who wishes to convert an appreciated asset into income and charitable use with minimal taxes! Barrett was very pleased with how Wheaton skillfully and professionally negotiated with partners, buyers, and brokers to complete the sale of his properties. The Andersons trusts released them from the burdens of property management while providing significantly higher income than was provided by the rental properties. In addition, Barrett and Regis avoided capital gains taxes, received a large charitable deduction, and diversified their investment portfolio. Barrett is grateful for his Wheaton education, which gave him a solid foundation for his faith, his life, and his career as an orthodontist. Both he and Regis greatly value Christian education in today s world. They say, Other folks gave so that we were able to go to excellent Christian colleges, and we feel led to do the same for the next generation. Charitable Remainder Unitrust Donor Testimonial: Charitable Remainder Unitrust The unitrust has become a favorite gift planning tool because of its flexibility and versatility. Benefits of a Charitable Remainder Unitrust Lifetime income Partial income tax deduction at time of contribution Avoidance of capital gains taxes at contribution and sale of appreciated property Tax-free investment and reinvestment of trust property in a diversified portfolio Professional fiduciary management services Significant investment in the ministry of and other Christian ministries Due to the flexibility allowed in structuring the lifetime income payments, the unitrust is an excellent vehicle for contributions of less readily marketable property such as real estate, closely held stock, interests in limited liability companies and partnerships, and even tangible personal property, such as valuable jewelry, coins, artwork, crops, and livestock. The two types of unitrusts generally used are the standard unitrust and the flip unitrust. You can learn about them, along with their corresponding life income payment options, in the right margin sidebar. g i f t s o f c a s h o r appreciated property donor Pooled Income Fund income tax deduction va r i a b l e i n c o m e makes a final distribution at your death. You receive fixed annual payments in an amount designated by you in the trust agreement. The annual payment remains the same throughout your life, assuming the sufficiency of the annuity trust assets. The annuity trust is an option for gifts of cash or marketable securities. Benefits of the Charitable Remainder Annuity Trust Fixed lifetime income Income tax deduction at time of contribution Avoidance of capital gains taxes at contribution and sale of appreciated property Significant investment in the ministry of Ability to remember other Christian ministries Pooled Income Fund The Pooled Income Fund allows you to contribute smaller amounts of cash or appreciated property than would be necessary if you were contributing property to a charitable remainder trust, yet it still provides many of the same financial and tax benefits. A pooled income fund is sometimes described as a charitable mutual fund. You can contribute cash and marketable securities in exchange for units in the fund. Income from the fund is paid to you based on the proportion of your units to the total number of units in the fund. At your death, assets equal to the value of your units in the fund are distributed to. at d e at h o f d o n o r, p o rt i o n o f f u n d a s s e t s d i s t r i b u t e d to wheaton college Pooled Income Fund Standard Payment Charitable Remainder Unitrust (Standard Unitrust) The standard payment charitable remainder unitrust pays you an annual amount ( unitrust payment ) equal to a specified percentage of the fair market value of the trust as revalued annually. You designate in the trust agreement the percentage to be used in this annual calculation of the unitrust payment. For instance, if you designate 5%, and the value of the unitrust assets is $100,000 on the date of valuation, the unitrust payment for the year will be $5,000. If the value of the unitrust goes up to $105,000 the following year, the unitrust payment will be $5,250 for that year. The unitrust payment can be paid annually, semiannually, or quarterly. The standard unitrust is most appropriately used when funded with appreciated marketable securities or cash. Flip Charitable Remainder Unitrust (Flip Unitrust) The flip unitrust provides flexibility in the payment of life income from the trust when less marketable assets, such as real estate and closely held business interests, are contributed. If you contribute a non-liquid asset which produces little or no income, a standard unitrust will have difficulty making the initial payments since there is no cash or other liquid asset in the trust with which payments can be made. The initial unitrust payments of a flip unitrust are in an amount which is equal to the lesser of the standard unitrust payment (the payment determined by applying the stated percentage multiplied by the fair market value of the trust) or the income produced by the trust. Thus, if no income is produced, no payment is made from the trust until the year following the sale of the asset, at which time the normal standard unitrust payments will begin and continue for the life of the charitable remainder unitrust. Charitable Remainder Annuity Trust The charitable remainder annuity trust is attractive to donors who want fixed annual payments. Unlike a gift annuity, which also pays a fixed annual payment, an annuity trust allows you to remember other charities as well as Wheaton when the trust Benefits of the Pooled Income Fund Lifetime income Partial income tax deduction at time of contribution Fiduciary management and investment expertise of Trust Company The flip unitrust can also be used where you contribute to a unitrust in either one or a series of contributions, but do not want to receive significant unitrust payments until a future point in time, such as when you retire. The flip unitrust can be structured to only pay income to you during pre-retirement years, and then, at the date you specify for retirement, begin making the standard unitrust payments. This allows the unitrust to invest for greater growth during pre-retirement years with the plan of providing a larger unitrust payment to you at retirement

12 Avoidance of capital gains taxes at contribution and sale of long-term capital gain property Tax-free investment and reinvestment of long-term capital gain property in a diversified portfolio Significant support for Wheaton s ministry, as trustee of the pooled income fund, invests the fund assets in a diversified portfolio. The invested assets provide the opportunity for growth over a period of time and a consistent stream of income. Gifts at Death Bequests You can leave a legacy for future generations by giving a bequest to. The term bequest generally refers to gifts made at your death through your Will, revocable trust, insurance policy, retirement account, or other estate planning technique. To give to Wheaton at your death, you can include a provision in your Will or revocable trust; you can name Wheaton College as the designated or contingent beneficiary of your individual retirement account or other retirement plan; or you can designate Wheaton as a beneficiary of your life insurance policy. You can also name Wheaton under payable on death accounts or under transfer on death designations of stock certificates. Following are advantages of providing for the College through a bequest at your death. Potential Bequest Benefits Retain control and benefit of your assets during your lifetime Decrease size of your taxable estate Create a legacy that will significantly impact the future of Wheaton s ministry Create an endowment which will continue your lifetime giving to Wheaton Jay and Patti Kelley Although Jay and Patti Kelley 74 graduated from over 30 years ago, they still feel a strong sense of gratitude for their Wheaton experiences. The Kelleys say they support Wheaton, years after graduating, marrying, raising three sons, and establishing a successful business near Seattle, Washington, because of the intellectual and spiritual development they experienced while attending Wheaton College. As Wheaton Associates and members of the Blanchard Society, they believe in the College s ministry and mission today. Not only do Jay and Patti continue to support Wheaton during their lives, but they have also made plans to support the College at their deaths. They have executed Wills which provide for each other, their children,, and other Christian ministries. Their Wills provide for their family, but also serve as a vehicle to reflect their values of Christian stewardship. Jay says, Patti and I want to ensure that future generations will be as blessed as we were. Jay and Patti s provision for Wheaton in their Wills allows them to make a significant gift to Wheaton s ministry which will carry on a legacy at after their deaths. Gifts at Death Donor Testimonial: 18 19

13 Designation of Your Bequest Undesignated bequests are of special importance to the College, since they allow the College to use your gift for its most pressing needs at the time the bequest is distributed. However, the College welcomes your designated bequest when a specific aspect of the College s ministry is important to you. In planning a designated bequest to Wheaton, it is best to allow the use of the bequest for multiple aspects of Wheaton s ministry in case an originally designated program no longer exists or if unanticipated difficulties in funding arise since the time you planned the bequest. Please make sure that designations are to approved programs. If at all possible, discuss your bequest with us to ensure a smooth implementation of your plans and objectives at the time of the bequest distribution. Bequest Language The charitable bequest can be a fixed dollar amount, a percentage of the total estate, or a percentage of the residual estate. The following are examples of bequest language. Gift of specific dollar amount: I hereby give the sum of $ to Wheaton College, located in Wheaton, Illinois. Bequests d e s i g n at i o n o f g i f t s t o w h e at o n in w i l l donor Will Gift of specific percentage of estate: I hereby give % of my estate (or my Trust assets if using a Living Trust) to, located in Wheaton, Illinois. Bequest with as Contingent Beneficiary: In the event that any of my above-named beneficiaries do not survive me, I hereby direct that their shares be distributed to, located in Wheaton, Illinois. We encourage you to provide us with information concerning your bequest, including copies of documents naming as a bequest beneficiary. Not only does this provide encouragement to us, but it allows us to better understand your intentions regarding the use of your gift and to appropriately respond to your executor or trustee at your death. All such documents are kept in our confidential files. If you intend to include Wheaton in your Will, you should consult with your estate planning attorney to plan and implement such provisions in order to ensure the legality of your bequest language. Please feel free to discuss with us any aspect of your bequest, especially if you are interested in setting up a deferred gift or endowed scholarship through your Will or estate plan. gift at death Charitable Lead Trust Donor Testimonial: Kenneth and Margaret Taylor Kenneth 38 and Margaret 39 Taylor considered numerous gift planning strategies presented by various charities. The Charitable Lead Trust stood out from among the many alternatives. The charitable lead trust was the perfect instrument, says Ken and Margaret s son, Mark Taylor, who assisted in implementing his parents estate planning decisions. The lead trust helped to minimize gift and estate taxes and accomplished three goals his parents had in mind. The trust provided for Ken and Margaret s children after Ken s death; it strengthened s PhD Fellowship program; and it provided for Wycliffe Bible Translators, another charity close to the Taylors hearts. The Taylors had confidence in the Trust Company. They were impressed with the staff s professionalism and knowledge of complex gifts and its helpfulness in thinking through a number of different gift planning strategies. Mark says, We also appreciated that Wheaton handled the investment of the funds, the quarterly payouts to the second charity, the final payout to the family beneficiaries, and the tax reporting to the beneficiaries when the trust expired. Mark says that his father always saw his Wheaton experience as having provided a solid groundwork for everything that he did professionally after college. Ken s career included translating The Living Bible and co-founding Tyndale House Publishers along with his wife. Ken and Margaret were pleased to give back to by devoting funds from their lead trust to the College s biblical studies PhD program. Mark says, We trust that the Wheaton portion of those funds will be used for many years to help underwrite the financial needs of students in the PhD program for biblical studies. Charitable Lead Trust The charitable lead trust (charitable income trust) can be a useful tool for avoiding significant gift and estate taxes, while contributing to and remembering your family with a significant gift. A charitable lead trust can be created during your lifetime or at your death through your Will or revocable trust. A charitable lead trust pays annual income to Wheaton (and possibly other Christian ministries) for a term of years, or for the life of an individual, after which the trust s assets are distributed to family members. The income can be determined as a percentage of the trust s assets as revalued each year, or as a fixed annuity that remains stable for the term of the trust. Such an arrangement can significantly reduce estate or gift taxes which would otherwise be due on the transfer of assets to family members. When you transfer cash or property to a charitable lead trust, you are making two gifts: one to charity that equals the value of the annual payment to charity; and one that gives the ultimate distribution of the trust assets to your family. The economic value of the annual payment to charity, for gift and estate tax purposes, reduces the value of the gift to your family. This reduction in the value of the taxable gift to your family may be particularly dramatic where the 20 21

14 Charitable Lead Trust transfer of property donor valuation of the contributed assets can be even further reduced due to certain federal tax valuation discounts. In some instances, the economic value of the deferred gift to your family can be reduced to close to nothing. Details involving charitable lead trusts, valuation discounts, different types of assets, and the federal discount rate used to value charitable income interests must be analyzed carefully with the help of your tax advisor. Benefits of the Charitable Lead Trust Reduce or eliminate gift and estate taxes on significant gifts to family Make significant contributions to the ministry of Wheaton and other Christian ministries Charitable Lead Trust Example: Joe and Jean Smith own a small office building, which has a non-discounted value of $1 million and annual net rents of $60,000. Joe and Jean transfer the building into a limited partnership with the result that each of them owns 50% of the partnership interests. Since the real estate is now in a partnership, for tax valuation purposes, neither the real estate nor the partnership interests are considered to be readily marketable. Because of this lack of marketability and the minority ownership interests, an appraiser appraises the partnership interests with over a 30% discount to the underlying value of the real estate. Joe and Jean transfer their limited partnership interests into a Charitable Lead Trust, which will pay $60,000 annually to charity for 20 years. At the end of 20 years, the trust distributes the partnership interests to Joe and Jean s children. Because of the discounts applied to the valuation of the contributed assets and the high charitable payout, the gift to the children is valued for tax purposes at close to zero. Thus, with this valuable asset, Joe and Jean have made a significant gift of the asset s income flow to Christian ministries, and transferred that asset to their children (after 20 years) with essentially no gift or estate tax consequences. Charitable Lead Trust Donor Advised Fund created its Donor Advised Fund to help enhance your giving to and to encourage and facilitate your giving to other qualified charities. The Donor Advised Fund provides an efficient, flexible way to make gifts of appreciated property as well as cash. Benefits of the Donor Advised Fund Partnership with Wheaton. The Donor Advised Fund allows you to share in Wheaton s ministry of shaping students into whole and effective servants of Christ. One Stop Giving. The Donor Advised Fund provides a convenient, cost effective opportunity for charitable giving, particularly the gifting of appreciated assets, which would otherwise be difficult or inconvenient to split between your favorite charities. The donor advised fund also allows you to differentiate the timing of your gift for tax purposes and the distribution to charities; give now and recommend charities later. And you receive just one concise receipt for income tax purposes. donor annual income remainder to family g i f t s o f c a s h o r appreciated property i n c o m e ta x d e d u c t i o n Donor Advised Fund Donor Advised Fund recommended distributions t o w h e at o n college a n d o t h e r c h a r i t i e s Charity Recommendation. The Donor Advised Fund allows you the opportunity not only to support the ministry of Wheaton College, but also to recommend other charities for gifts from the Fund. You can choose between a short-term fund from which distributions are made to charities within a relatively short period of time or an endowment fund from which distributions are made to charities over a longer period of time. A Charitable Legacy. Through the Donor Advised Fund, you can create a charitable endowment, which will annually support qualified charities during your life and after your death. Your ability to recommend distributions to qualified charities can be passed on to family members so that they too can share in the joy and excitement of charitable giving. Advantages over Commercial Donor Advised Funds and Private Foundations. Wheaton seeks to develop long-lasting relationships with its Donor Advised Fund donors. This relational approach is a refreshing alternative to the computerized, internet, telephone-tree driven world of commercial donor advised funds. Also, its efficiency and simplicity make the Donor Advised Fund an attractive alternative to the expense and complexity of a private foundation. Financial Strength. Endowment funds are invested by the Donor Advised Fund through the Trust Company in the same well-managed investment pools as Wheaton s own endowment. Donor Advised Fund Donor Testimonial: Bud and Betty Knoedler Trustee Emeritus, Bud Knoedler 51 and his wife, Betty 50, were so impressed with the financial strength and proven investment track record of the Trust Company that they transferred the assets of their private family foundation to the Wheaton College Donor Advised Fund. The funds previously held in their private foundation are now managed by the Trust Company. Bud says the transfer of his private foundation to the Donor Advised Fund was simple and seamless. Wheaton professionally handled the transfer and now manages the administrative details. He says the best part of having a Donor Advised Fund is that, You take away all the administrative tasks and are left with the blessing of giving and distributing funds to Wheaton and other charities. The Fund also frees him and his wife from the private foundation s administrative overhead, including costs associated with annual filings, record keeping, and investment decisions. Bud says, Now all funds go to ministry rather than overhead, and there is an ease of distribution. Bud and Betty desire that the income from their Donor Advised Fund go towards furthering and supporting Christian ministry. It is important to us, says Bud, to establish a mechanism of endowment type giving, where future family members can step in and have the joy of supporting the Lord s work. For Bud and Betty Knoedler, their Donor Advised Fund provides such an opportunity

15 d o n o r sells property t o w h e at o n college at price below appraised market value Charitable Bargain Sale w h e at o n college sells property a n d uses proceeds donor income tax deduction cash from sale to wheaton college Remainder Interest in Personal Residence or Farm You can give a residence or farm to, receive an income tax deduction for doing so, and still retain full use of the property during your lifetime. This type of gift is known as a gift of a remainder interest in a personal residence or farm. After you make the gift, nothing changes as far as the actual use of the property. You can continue living in your personal residence or continue living on or renting your farm property. Depending on your age, the immediate Gift of Remainder Interest in Personal Residence or Farm donor Alternatively, by giving a remainder interest in your property to Wheaton s Donor Advised Fund, you can give to other charitable organizations as well as Wheaton. Benefits of a Gift of Remainder Interest in Personal Residence or Farm Immediate income tax deduction Lifetime use of your residence or farm Significant gift to Wheaton s ministry transfer interest in property income tax deduction retain lifetime use of property Benefits of the Charitable Bargain Sale Avoid capital gains taxes on the donated portion of the property Receive a tax deduction for the appraised value of the donated portion of property Receive cash from the non-donated portion of the property Flexible Endowment If you desire to set up an endowment for the College, but you would like to manage the endowment assets on your own or you are unable to make an outright gift, you can still establish a currently operating endowed scholarship or endowed chair by using the flexible endowment. By actually funding an endowment over a period of time or by bequest, you can see the operation and benefit of a fully funded endowment during your lifetime. You establish a flexible endowment by committing to make future gifts to build the principal of the endowment. Until the endowment is funded completely, you also commit to give annual expendable gifts for the current purposes of the endowment equal to the income which would be generated by a fully funded endowment. As the principal builds and generates endowment income, that endowment income can offset the amount that you are required to give each year for current use. Your commitment would be secured by an irrevocable bequest, a pledge of paidup life insurance, or a designation of the remainder interest in a charitable remainder trust, farm, or personal residence. Benefits of a Flexible Endowment Establish an operating endowment which provides current benefit to Wheaton students Fund the principal of the endowment at a later date Revocable Gifts Revocable Trust A revocable trust is a popular estate planning tool that can provide for succession of management of your estate assets when you no longer desire or are no longer capable of managing them. The revocable trust is revocable and amendable during your life. The trust helps avoid expensive court supervised estate probate administration at your death, and it income tax deduction received for the transfer of property can be a substantial percentage of the fair market value of the real estate. At your death, the College becomes the sole owner of the property and directly benefits from the proceeds of the property s sale. It is even possible, in some instances, to give Wheaton a remainder interest in your residence or farm in exchange for a gift annuity so that you have the benefits of both lifetime use of the property and lifetime annuity payments from. Charitable Bargain Sale A charitable bargain sale takes place when you sell real estate or other property to at a price substantially below appraised market value. Wheaton pays you the agreed upon price, which allows you to retire your mortgage or use the cash for other purposes. The College will usually sell the property and use the net proceeds for its general ministry purposes, or, if you prefer, a designated purpose. donor future gift of cash or appreciated property annual gift equal to income generated from funded endowment Flexible Endowment income tax deduction Current Operating Endowment 24 25

16 Revocable Trust transfer assest to trust Revocable Trust g i f t t o w h e at o n college a n d possibly o t h e r charities at death Gifts at a Glance Gift Vehicle Benefits Typical Assets Charitable Gift Annuity The following guide offers a quick look at Wheaton s gift planning opportunities. Each gift plays a vital role in supporting Wheaton s ministry. For minimum gift requirements and age specifications, please refer to insert in back cover pocket. Fixed lifetime income Partially tax-favored income Charitable income tax deduction Cash Appreciated Securities donor gift to family members at death Charitable Remainder Unitrust (CRUT) Avoidance of capital gains taxes upon sale of appreciated property Lifetime variable income Charitable income tax deduction Tax-free diversification Professional, fiduciary management services Support for other charities (if desired) Appreciated Securities Real Estate Cash serves as a substitute for your Will. The trust can be an efficient tool to make gifts at your death to both family members and charitable organizations such as. In fact, a revocable trust can provide the means to make an extremely significant gift at your death, and thus make a lasting impact on the ministry of Wheaton. If you are remembering through your revocable trust, Trust Company can, in some cases, serve as the trustee or successor trustee of your revocable trust, particularly when a family member is not available or qualified to serve as trustee or as a lower cost alternative to bank trust departments. Charitable Investment Trust You can name Trust Company as trustee of a special revocable trust called the Charitable Investment Trust. You transfer a portion of your investable assets to the trust and name Wheaton College as one of the beneficiaries to receive the trust assets at your death (along with other charities or family members). During your life, you would receive either the annual income or an annual percentage payout from the trust, yet you would retain the right to withdraw the assets in case of medical or other family emergencies. This gives you the opportunity during your life to utilize Trust Company s fiduciary services for a portion of your estate, including the opportunity to have the assets invested in the Trust Company s common trust funds alongside the endowment of. Benefits of the Charitable Investment Trust Utilize the fiduciary trust services of Wheaton College Trust Company Invest assets in Trust Company s common trust funds alongside assets of endowment Retain right to withdraw assets for personal emergencies Segregate and designate funds for gift to at your death Charitable Remainder Annuity Trust (CRAT) Pooled Income Fund Charitable Lead Trust Remainder Interest in Personal Residence or Farm Donor Advised Fund (DAF) Flexible Endowment Charitable Bargain Sale Avoidance of capital gains taxes upon sale of appreciated property Lifetime fixed income Charitable income tax deduction Tax-free diversification Professional, fiduciary management services Support for other charities (if desired) Lifetime income Investment diversification Charitable income tax deduction Avoidance of capital gains taxes upon sale of long-term appreciated securities Reduced gift/estate taxes Fixed/variable income to Wheaton for set period Assets to heirs at termination of trust Charitable income tax deduction Lifetime use of personal residence or farm Fixed lifetime income if combined with gift annuity (available for select property) Liquidation and distribution of gifts to and other charities Family endowment with annual distribution to Christian ministries Convenient, flexible, cost effective alternative to private foundation Charitable income tax deduction Professional, fiduciary management services Operating endowment for immediate benefit of Principal of endowment funded at a later date or through estate Avoidance of capital gains taxes on donated portion of property Charitable income tax deduction Cash from sale of property Appreciated Securities Cash Appreciated Securities Cash Cash Real Estate Securities Real Estate Cash Appreciated Securities Real Estate Cash Appreciated Securities Real Estate Real Estate Closely Held Securities Charitable Investment Trust transfer assest to trust donor Charitable Investment Trust g i f t t o w h e at o n college a n d possibly o t h e r charities at death Charitable Investment Trust (CIT) Revocable Trust Fiduciary trust services of Trust Company Assets invested alongside Wheaton s endowment Support for (and other charities) at death Right to revoke trust Trust Company as trustee or successor trustee Avoidance of probate costs Succession of management if incapacitated Power to control trust during life Generally Cash Cash Property Appreciated Securities Insurance Retirement Plans a n n u a l i n c o m e fiduciary services o f w h e at o n college t r u s t c o m pa n y gift to family members at death IRA Charitable Remainder Trust Bequest Avoidance of recognition of income tax at death Stream of income for donor s spouse or others Professional, fiduciary management services Control and benefit of assets during life Reduced estate and income taxes IRA 401(k) 403(b) Cash Property Securities Insurance Retirement Plans Irrevocable gifts that provide lifetime income Miscellaneous gift planning tools Revocable gifts 26 27