Planning Your Gift
PLR Issued by IRS
Committee on Development
March 2, 2007
In late December, Hamilton College, Princeton University and Amherst College joined Harvard, Stanford and M.I.T. as recipients of Private Letter Rulings (PLR) that allow charitable remainder trusts to participate in the investment return of the entire endowment. These charitable gift vehicles will benefit from increased diversification and growth potential.
The PLR request was submitted to the Internal Revenue Service on November 6, 2004, and mentioned at these meetings on at least three occasions.
As you know, charitable remainder trusts make fixed or variable payments to donors or named beneficiaries for life or a term of years. In addition, donors enjoy income, capital gains and estate tax savings. Upon termination, the trust assets are used according to the wishes of each donor, typically to establish an endowed fund at Hamilton, such as a professorship or scholarship.
Donors and Hamilton have a mutual interest in trust appreciation to meet the donors’ philanthropic objectives and College’s needs. In addition, donors receive increased payments when the assets of variable payment trusts, known as unitrusts, grow.
Through access to investments generally not available to charitable remainder trusts, this IRS ruling allows significant diversification and growth potential. Hamilton’s endowment investment performance has ranked among the best in the country, achieving a 12.2% total average annual rate of return for the 10-year period ended June 30, 2006.
Every year, Hamilton receives dozens of planned gifts — charitable remainder trusts and charitable gift annuities — ranging from several thousand to several million dollars each. Included in the college’s portfolio of more than $705 million under management are planned gifts of $77 million, including eight unitrusts valued at $22.5 million participating in the investment return of the entire endowment under the PLR.