Leaving a charitable gift to the Dr. Melvin C. Terrell Educational Foundation as part of your estate planning can be the “ultimate” gift. Bequests can be made in three different ways: by naming a specific dollar amount to go to the foundation, by giving the foundation a percentage of the total estate, or by leaving the remainder of the estate to the foundation after all other specific bequest intentions are paid out.
Bequests, special gifts made through a will, are significant sources of support to the foundation and are the most straightforward form of estate giving. A bequest to the Dr. Melvin C. Terrell Educational Foundation is not subject to an estate tax and helps reduce the tax liability for your heirs.
One popular form of estate giving is called a residuary bequest, through which the college receives the portion of the estate that remains (the residue) after other beneficiaries are provided for in the will. Another form of estate giving is a special request through which a specified sum or property or a specified percentage of your estate is given to the foundation.
The simplest form of bequest is a provision in a will making an outright gift of money or property to the Dr. Melvin C. Terrell Educational Foundation. Gifts through your will are not subject to Federal Estate Taxes and thus substantially reduce the tax liability of your estate. If you wish, you may restrict your gift to a particular department or program. Also, you may direct that the corpus be held in trust, with only the income being used. The basic wording for your will, which your attorney will need, is (for example): I give, devise, and bequeath to the Dr. Melvin C. Terrell Educational Foundation, organized, chartered, and operated under the laws of the State of Illinois.
Some estate planning vehicles, such as charitable lead trusts, can help you pass assets to your children or grandchildren while providing an income stream for the foundation over a period of time. Others, such as a remainder trust, can provide income to you or your spouse during your lifetime, with the remainder passing to the Dr. Melvin C. Terrell Educational Foundation at the end of the trust period. There may be tax advantages to the donor, depending on the assets and the vehicle selected.
Testamentary Trust or Annuity
A Testamentary Charitable Trust or Annuity may be set up to provide life income to a survivor, with the principal going to the foundation Incorporated upon the survivor's death. Any charitable deduction for estate taxes will be subject to the same limitations that are applicable to Charitable Remainder Trusts.
You may prefer to designate your gifts for specific purposes. Your gifts can provide opportunities to name scholarships, chairs and lectureships and other funds in recognition of yourself, another person, a family, or a corporation.
Charitable Remainder Trust
You may prefer to make a deferred gift through a charitable remainder trust. This trust provides an immediate income tax deduction for the value of the remainder interest in the trust based on Internal Revenue Service life expectancy tables, your age and rate of return at that time. These trusts are individually managed with annual payments made to your named beneficiary for his or her lifetime. The Dr. Melvin C. Terrell Educational Foundation is not chartered to serve as trustee; therefore, a third party (such as a bank or friend) should be used. After the death of the named beneficiary, the trustee will be the Dr. Melvin C. Terrell Educational Foundation.
The two types of Charitable Remainder Trusts are:
Annuity Trust: The annual payment is a fixed dollar amount based on a percentage (which must be at least 5 percent) of the initial fair market value of the trust property.
Unitrust: The annual payment from a unitrust is a fixed percentage (which must be at least 5 percent) of the value of the trust assets re-evaluated each year.
Both trusts are quite flexible and offer options that should be considered.