Garrett-Evangelical’s planned giving program encourages giving through bequests, gift annuities, trusts, pension plans, IRAs, and insurance policies. Planned giving plays an important role in sustaining the excellent work of the seminary for generations to come. Whether you prefer to put your gift to work today or defer benefits until after your lifetime, you can create a charitable plan that allows you to simulataneously provide for your family and support Garrett-Evangelical.
If you have questions or would like further information on ways to give contact David Heetland, senior vice president for planned giving, by email or 847.866.3970.
Bequests: Leave a Legacy by Remembering Theological Education in Your Will
The most common method of deferred charitable giving is that of a bequest, i.e., a gift through one’s will. Cash, securities, real property, or personal property can be left to Garrett-Evangelical Theological Seminary. Bequests can be given for either unrestricted or restricted purposes. There are three common formats for bequests:
The Specific Bequest
“I give and bequeath the (sum or description) of my estate to Garrett-Evangelical Theological Seminary, Evanston, Illinois, an Illinois not-for-profit corporation, for its educational and charitable purposes.”
The Residuary Bequest
“I give and bequest (all or __%) of the rest, remainder, and residue of my estate to Garrett- Evangelical Theological Seminary, Evanston, Illinois, an Illinois not-for-profit corporation, for its educational and charitable purposes.”
The Contingent Bequest
“In the event that (my spouse or my children) shall not survive me, then I give and bequeath (sum or description of property) of my estate to Garrett-Evangelical Theological Seminary, Evanston, Illinois, an Illinois not-for-profit corporation, for its educational and charitable purposes.
The donor is encouraged to notify the seminary development office of such a bequest intention, either by providing to that office a copy of the appropriate section of his/her will or by completing the seminary’s Memorandum of Intention form.
Estate Giving: A Future Gift of Home or Farm Provides a Current Benefit
Appreciated (and Debt-Free) Real Estate
A debt-free parcel of real estate may be gifted to Garrett-Evangelical, generating a current income tax deduction for the fair-market value of the property as established by a qualified appraisal.
The gift of debt-free real estate to the seminary means that the unrealized gain is not taxable to either the donor or the seminary. Gifting debt-free appreciated real estate works well in circumstances similar to the gifting of appreciated long-term capital gain property outlined above.
A bargain sale is a sale of property (house, condominium, apartment building, farm, empty lot, etc.) to Garrett-Evangelical for less than the fair-market value of the property. For example, an individual with a piece of property having a fair-market value of $200,000 may choose to sell that property to the seminary for $100,000, thereby gifting a portion of the property to Garrett- Evangelical. The donor is making a charitable gift equal to the difference between the fair- market value of the property and the selling price. Gifts of mortgaged property are, in effect, bargain sales.
Gifting property through a bargain sale works well if
- the donor has a low basis in a parcel of real estate which has appreciated significantly,
- the donor wishes to recover some, or all of his/her investment in the property,
- the transfer is structured so that the charitable deduction on the “gift” portion of the transfer offsets, or exceeds, the capital gains tax on the “sale” portion.
Retained Life Estate—Gifting My House and Living There Too
Donors may choose to gift their home, recreational home, or farmland and retain a “lifetime interest” in the property. Ownership of the property is transferred to Garrett-Evangelical Theological Seminary, but full use and control of the property are retained by the donor (who continues to be responsible for taxes and general upkeep and repair to the property).
An income tax deduction, based on the property’s current market value and the life expectancy of the donor(s) is allowed. Upon the death of the donor(s), the “lifetime interest” of the donor(s) is terminated, and the full use and control of the property are transferred to the seminary.
Life Insurance: A Gift to Ensure the Seminary's Future
It is possible to make a gift of an existing life insurance policy by transferring all rights of ownership to Garrett-Evangelical Theological Seminary. This gift may yield a substantial deduction for income tax purposes. The deduction is equal to the policy’s replacement value or the donor’s basis in the policy, whichever is less. If premiums remain to be paid on the policy and the donor chooses to make those payments, a current income tax deduction is allowed for each payment.
When the seminary receives an existing life insurance policy, it has the option of retaining the policy until the death of the donor, continuing to pay any remaining premiums on the policy, terminating the policy and taking the current cash surrender value, or taking out a loan against the policy and repaying that loan at the time of the death of the donor.
Gifting an existing life insurance policy works well if
- the original purposes for which the insurance was secured (e.g. mortgage protection, insuring tuition payments, etc.) are no longer relevant
- the policy has been paid up, or the donor can continue making premium payments (for charitable deductions)
- there is a high cost basis or replacement value for the policy
- the donor needs a charitable deduction for current income tax purposes
Gift Annuity: Receive Income from an Annuity Gift to Garrett-Evangelical
In return for a gift of cash, marketable securities, or real estate, a donor (and/or another beneficiary) receives an income for life, guaranteed by the assets of Garrett-Evangelical. The donor receives an immediate charitable contribution deduction. The amount of the annuity income is based on the age of the beneficiary(ies) and a portion of that income is tax-free. At the death of the last beneficiary, the remainder passes to the seminary. At the time of the initial gift, the donor may designate how the funds will ultimately be used by the seminary.
The Deferred Payment Annuity
The charitable gift annuity may be structured as a retirement planning vehicle. Donors who are in their high income years may make contributions (and qualify for a current income tax deduction) and defer annuity payment or trust income until their retirement. Following retirement, the donor(s) would receive income for the rest of their lives.
Trusts: Earn Income and Tax Benefits for You and Your Family While You Give
Charitable Lead Trust
Cash, marketable securities, and (in some cases) real estate may be placed into a charitable lead trust that provides income to Garrett-Evangelical Theological Seminary for a specified term of years. At the end of the term years, the assets in the trust revert to the donor or to the individual(s) designated by the donor. There is no current income tax deduction for this type of gift, but there is a gift (estate) tax savings. Such a plan allows property to be transferred to family members at a later date with a lowered tax cost. This vehicle is particularly appropriate for donors with relatively large estates.
Creating a charitable lead trusts works well if
- the donor has a highly-appreciated asset (or an asset for which considerable appreciation is expected in the future
- the donor wishes to provide annual cash for use by the seminary over a period of several years
- the donor wishes to transfer assets to his/her heirs at a lowered tax cost
Totten Trust (“Pay on Death”) Accounts
When an individual sets up a “Totten trust” bank account for the benefit of another person or a charitable interest at the time of the individual’s death, the account balance passes to the beneficiary outside the provisions of the donor’s will. The donor retains the right to withdraw funds as may be needed. Thus, there are no federal income tax savings allowed, even if the beneficiary is a charitable organization. At the death of the donor, the assets passing from a Totten trust to Garrett-Evangelical Theological Seminary are fully exempt from any applicable federal estate taxes.
Charitable Remainder Trusts
Cash, marketable securities, or real estate may be placed into a charitable remainder trust. The trust can be established during the lifetime of the donor or through the donor’s will. When the trust is created, the donor determines a fixed payout percentage of trust assets as valued annually (unitrust) or a fixed payout dollar amount (annuity trust). When the trust matures, either at the death of the last non-charitable beneficiary or at the end of a specified term of years (not to exceed 20 years), Garrett-Evangelical Theological Seminary is the ultimate beneficiary.
Annual trust payments to the beneficiary(ies) will vary depending on the value of the trust assets. An immediate charitable deduction is available to the donor, based on the rate of return and the length of time the trust is projected to be in existence.
The Retirement Unitrust
The charitable remainder unitrust may be structured as a retirement planning vehicle. Donors who are in their high income years may make contributions (and qualify for a current income tax deduction) and defer annuity payment or trust income until their retirement. Following retirement, the donor(s) would receive income for the rest of their lives.
The Educational Unitrust
A charitable remainder unitrust may be structured as a means of financing the university/college education of children or grandchildren. Donors who are in their high income years may make contributions (and qualify for a current income tax deduction) and defer trust income to the beneficiary until he/she reaches university/college age.
The Wealth Replacement Unitrust
A donor may gift highly appreciated assets to a charitable remainder unitrust and use some, or all, of their tax savings and/or of the trust income over a several year period of time to create a life insurance trust which will purchase “vanishing premium” life insurance on the donor. With proper planning, the original asset is “replaced” and passes to the donor’s heirs outside the estate. By doing so, the donor is able to make a major gift and replace that asset for the sake of his/her heirs.
Meet Some of Our Planned Giving Donors
“When we give to causes and organizations, we are making an investment as well as a charitable gift,” she explained. “Just as we try to make wise choices when we invest in stocks or bonds, we have a responsibility to invest wisely in our charitable giving.”
That’s why Judge decided to invest in Garrett-Evangelical. She created a planned gift through the Florida United Methodist Foundation and named Garrett-Evangelical one of its beneficiaries. Upon her death, the money will go to Garrett-Evangelical to provide scholarships for women.
Holly Craig and Gerald Parker
Holly and Jerry chose to take out a $120,000 gift annuity with the proceeds from their home sale. A gift annuity will assist them in their retirement planning by providing a steady source of income each year for as long as they live. It will also enable Garrett-Evangelical to use the charitable remainder portion immediately to help fund the Center for Music and Worship in the Black Church Experience—a win for Holly and Jerry and for the seminary.
“There is great satisfaction in helping the seminary move ahead in this creative way,” Holly said. “We hope others will consider joining us in this endeavor.”
The information contained on this webpage is intended for informational purposes only and is not intended to be legal or tax advice. In the case of most non-cash, tax-advantaged gifts (outright or future) to the seminary, donors are encouraged to consult with their own financial advisors as they review materials and proposals which seminary staff and/or volunteers have prepared for their consideration.