Planning Your Gift
Planned Gifts for Younger Donors
Committee on Development Meeting
March 7, 2008
After the last meeting in New York, a trustee who graduated in 1973 asked me which planned gifts are appropriate for alumni, parents and friends in our age group. Then he quickly answered his own question, "I know outright gifts are best for me and Hamilton."
Beyond outright gifts of cash and appreciated capital assets, such as securities and real property, several planned gift strategies are available to alumni of all ages.
estate plan provisions
beneficiary designations, pension, IRA and insurance
Some of you may have known Andrew Begley '99, a rising star in the General Electric Financial Management Program who died accidentally on January 1, 2005. He had the foresight to name Hamilton as a beneficiary of a portion of his retirement plan, a provision that unfortunately took effect.
Retirement plan assets have been a frequent topic at these meetings. As noted, perhaps as much as 65 cents of every dollar in an IRA could be consumed by taxes. The conventional wisdom has been, and continues to be, to make Hamilton the successor beneficiary of IRAs and other qualified plans. The chart below demonstrates the benefits.
Assumption: $1,000,000 IRA at the death of the survivor of husband and wife:
Contingent beneficiary Heir Hamilton
Estate tax $460,000 $ 0
Income tax $189,000 $ 0
Net benefit $351,000 $1,000,000
"Younger" donors may complete irrevocable planned gifts that provide benefits now: income tax charitable contribution deductions and capital gains tax savings as well as streams of payments that begin at a future date — presumably when we are in lower tax brackets. The payments may be fixed or variable. In either case, they will be much larger than they would have been if they began at the time of the contribution.
A contemporary of ours has completed 14 Deferred Payment Charitable Gift Annuities that begin making payments in 2017, the year he and his wife turn 65. He and his wife hope they do not need the income, allowing them to give up their payments and entitling them to additional income tax charitable contribution deductions.
My colleague, Joni Chizzonite, and I are available to assist potential donors of any age complete contributions in the form that is most advantageous to donors and to Hamilton.
Benjamin P. Madonia III