Harry Ransom CenterThe University of Texas at Austin

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Gift Planning

Woman holding book

Olivia Primanis, Senior Book Conservator, examines one of one million rare books from the collection.
Photo by Eric Beggs.

Many friends of the Ransom Center contribute in meaningful ways with a planned or estate gift. You, too, can plan gifts of lasting impact.

Gift planning enables a donor to leave assets to the Ransom Center at the time of the donor's death or to contribute funds during the donor's lifetime so that the donor can receive an income, along with tax savings, and then also benefit the Ransom Center. Gift planning offers various options that can be adapted to each donor's needs and goals.

For more detailed information on planned gifts or to explore different gift planning methods, visit The University of Texas Gift and Estate Planning.

For a quick summary of popular gift planning options and how they can benefit both the Ransom Center and you, see the examples described below.

For more information on estates and trusts, sample language for your will, or for customized illustrations, please contact Margie Rine at 512-471-9643 or margierine@austin.utexas.edu.


Bequests to the Ransom Center

A bequest is one of the most powerful and flexible expressions of your support. If you are considering naming the Harry Ransom Center as a beneficiary of your will, we can provide customized sample language, or you may also visit the following website to review template sample language and forms for you to give to your attorney to ensure that your intentions are properly carried out. A carefully planned bequest is an excellent way to leave a significant legacy while reducing, and in some situations eliminating, estate taxes.


Gifts that Provide Income for Life and Tax Savings

Charitable Gift Annuity

The charitable gift annuity provides immediate fixed payments for life, but the funds remaining at the termination of the contract are distributed to the Ransom Center. A deferred charitable gift annuity provides an immediate and larger tax deduction and a higher rate of return by deferring the start of annuity payments to a future year you designate.

Sally Mitchell, 72, wants to make a stock gift to the Ransom Center but is concerned about giving up the dividend income from the stock. After speaking with her financial adviser, Mrs. Mitchell learns that charitable giving and retaining an income stream are not mutually exclusive. She establishes a charitable gift annuity funded with stock that she acquired several years earlier for $35,000, which has appreciated in value to $50,000. Mrs. Mitchell is happy with the results:

  • Mrs. Mitchell establishes a gift annuity valued at $50,000.
  • The payout rate on the gift annuity is 5.9%.
  • Approximately 48% of her annuity payments will be tax-free for 14.5 years.
  • Her gift earns her a charitable tax deduction of $20,780.
  • At her 28% tax bracket, this deduction saves her $5,818**.

**This is for illustration purposes only, and the deduction figure is based on the month in which the gift annuity is funded.

Charitable Remainder Trust

Etched windows

Etchings that depict holdings from the Ransom Center's collections. © Thomas McConnell Photography 2004

The charitable remainder trust converts significant appreciated assets into cash payments while eliminating capital gains taxes. This type of trust provides more planning flexibility than other options and, if created through your will, is one of the best ways to roll over your qualified retirement plan assets to leave more for your heirs and charitable interests.

John and Lois Wilson, 61 and 59, want to make substantial future gifts to the Ransom Center but are concerned about avoiding capital gains tax on highly appreciated assets. They also would like to enhance their income during retirement. The Wilsons learn that a charitable remainder unitrust would enable them to avoid any capital gains tax on the contributed assets while increasing their income. They establish a trust with a 5% payout, funded with assets valued at $500,000 (after an original investment of $250,000) and little, if any, income. Here are the results:

  • The Wilsons establish a unitrust valued at $500,000.
  • A 5% unitrust payout yields a first-year payment of $25,000**.
  • Their gift earns them a charitable tax deduction of $138,185.
  • At their 35% tax bracket, this deduction could save them $48,365.***
  • Avoidance of capital gains tax on $250,000 appreciation saves them $37,500.

** Future years' payments will vary, based on 5% of the unitrust's market value at the beginning of each year.
*** This is for illustration purposes only, and the deduction figure is based on the month in which the charitable remainder unitrust is funded.

Gifts of Life Insurance to Leverage Low Premiums

Life insurance can offer an attractive way to leverage low-premium payments to make a major gift to the Ransom Center. If you name the Center as the irrevocable beneficiary and owner of your policy, you obtain an immediate charitable tax deduction. You could also choose to name the Ransom Center as the revocable beneficiary of your insurance policy.

A Qualified Retirement Plan for Financial Security

Qualified retirement plans are an excellent way to build financial security for retirement. Should you pass away, however, leaving these funds as part of your estate, your heirs could face double taxation—estate and income tax—spiraling up to 70%. You can avoid these taxes with proper planning.

Dr. Stuart Baker, 45, a new supporter of Ransom Center programs, designates his wife as primary beneficiary of his well-funded qualified retirement plan. He understands, however, that his retirement plan assets could be depleted by both income and estate taxes if Mrs. Baker predeceases him and he leaves these assets to his children. His CPA advises Dr. Baker that he could name the Ransom Center as the secondary beneficiary and provide for his children through his estate plan with other assets that are not subject to double taxation. At Dr. Baker's death, if Mrs. Baker has predeceased him, his retirement plan assets will be used by the Ransom Center as he requested.

Making a Tax-Wise Loan to the Ransom Center

Theater entrance

Entrance to the Center's Charles Nelson
Prothro Theater. © Thomas McConnell
Photography 2004

By "lending" assets to the Ransom Center for a designated period of time through a charitable lead trust, you can pass those assets to your heirs and at the same time greatly reduce or eliminate federal estate and gift transfer taxes that could consume up to 45% of your legacy. This type of gift is particularly beneficial if the assets have a great potential to appreciate. Assets most commonly used to fund a lead trust are cash and marketable securities.

Remainder Interest in a Personal Residence or Farm

When you deed a remainder interest to the Ransom Center, you can continue to live in your primary residence, vacation home, or farm for the rest of your life. The property passes to the Ransom Center after your lifetime. Your gift qualifies for an income tax charitable deduction based on the market value of the property and your age.

Outright Gifts of Real or Personal Property

For a gift of appreciated real estate you have held for one year or more, you may take an income tax charitable deduction of the fair market value of the donated property—up to 30% of your adjusted gross income in the year of the gift—and carry forward any excess deduction for up to five additional years. Outright donations of assets such as closely held stock and other forms of property can also result in a substantial deduction.



The Harry Ransom Center does not provide legal, tax, or financial advice. We urge you to seek the advice of your own legal, tax, or financial professionals in connection with gift and planning matters.

 

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For more information on estates and trusts, sample language for your will, or for customized illustrations, please contact Margie Rine at 512-471-9643 or margierine@austin.utexas.edu.