Pikeville College - Giving to Pikeville

Planned Giving

Planned giving, or gift planning, is a thoughtful strategy that may allow you to make the gift of your choice while benefiting your personal finances. This is possible through advantageous tax laws that provide powerful incentives to support public and private charities.

Through planned giving, it is possible to reduce or eliminate federal and state taxes owed on the value of a gift. Planned giving can work in your favor when it comes to paying taxes on income, capital gains, gifts, an inheritance and your estate. These tax benefits are available to individuals at all income levels.

Pikeville College and the Pikeville College School of Osteopathic Medicine offer several options for alumni and friends to create a legacy through planned gifts. Review the information below on some of the ways you can invest in the future of our region through planned giving opportunities.

Bequest through will and trust

The most common way people make a planned gift to the College is a bequest through a will or trust. In addition to tax benefits, a well-planned bequest to Pikeville College allows you to continue giving. You can make a lasting, positive impact on the people and region you care about through your estate plan.

An estate plan allows you to determine how your assets will be distributed upon your death. It ensures that your assets are divided in an orderly manner. And, if done properly, an estate plan can reduce the taxes paid by your survivors. Including the College in your estate plan may reduce the total taxes on your estate and thereby increase the amount of your assets which will be passed on to your loved ones.

Estate gifts can be designated for a specific program or project you believe in strongly, or unrestricted for use by the College on its greatest needs. Gifts can be established in the form of endowments or trusts to provide perpetual funding. Gifts through bequests may be cash, real estate, securities, tangible personal property or other items of value.

There are several types of bequests, including a general bequest for a specific dollar amount to be used to meet the College’s greatest need at the time of the gift (unrestricted); a restricted bequest which is to be used for a specific project or program (i.e. a scholarship fund or a building); a specific bequest of an asset (i.e. stock); a residuary bequest directing that all or a portion of assets be directed to the College; a percentage bequest which directs a stated percentage of the estate be distributed to the College; or a contingent bequest, which would provide a gift to the College if the intended (primary) beneficiary either dies before the testator or disclaims a right to the testators’ property.

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Retirement plan

When planning your estate, assets that have increasing importance are retirement plans.

IRAs, 401(k)/403(b), Keogh and other retirements build tax-free income. The accounts, which can become quite sizable over the years, will be included as part of your estate at your death. Beneficiaries of account balances will be subject to federal income tax upon receipt. Possible estate and income taxes can result in the loss of a substantial portion of your retirement savings.

By designating a charitable beneficiary for your retirement account(s), you and your heirs may reduce income and estate tax liabilities. An increasing number of donors are choosing to leave their retirement plans to charities, while passing on other non-taxable assets to their heirs.

Another option is to name a charitable trust as beneficiary of your retirement plan to provide lifetime income (or income for a number of years) to a person you select, such as your spouse or a child. After the person’s lifetime, the balance of the trust will benefit the charity you select. Your estate will be entitled to a charitable contribution deduction.

You can also establish a charitable trust during your lifetime using assets from your retirement account. Withdrawals from your retirement account will be subject to income tax, but you will create a charitable deduction, further reducing the income tax due on the withdrawal.

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Gift of real estate

Appreciated real estate provide excellent opportunities for you to make a leadership gift to the College, while earning substantial tax benefits for yourself.

Real estate that has appreciated in value and would otherwise be subject to long-term capital gains taxes earns a charitable income tax deduction for the fair market value of the real estate on the date the gift is made. In this situation, the actual cost of the gift to you may be considerably less than the value of the contribution to the College, therefore your tax deduction is more than you paid.

Real estate may also be conveyed through a trust. You may wish to convey all or part of a personal residence, farm, cottage, mountain lodge or condominium to Pikeville and still retain a life interest in the property. During your lifetime, you may live on the property and enjoy its use and benefits, but cannot sell or mortgage it. Upon the death of you and/or your surviving beneficiary, the property is transferred to the College. You receive the dual advantages of a tax deduction for a charitable contribution in the year the gift is made, and a later reduction in taxes on your estate.

If you wish to make a gift of real estate and are not in a position to give the property entirely to Pikeville College, a bargain sale is another alternative. In effect, Pikeville buys the property for an agreed-upon percentage of the full, fair-market value. The difference between the property’s true value and the price Pikeville pays becomes a current tax-year charitable deduction for you.

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Gift of security

Gifts of appreciated securities which have long-term capital gains and have been held for more than one year offer substantial tax advantages. Making a gift of appreciated securities allows you to claim a charitable contribution, avoid capital gains taxes and reduce your estate.

A charitable income tax deduction is allowed for the fair market value of the securities on the date the gift is given to the College. You pay no capital gains tax on the appreciation when making the gift and the College pays no capital gains when the securities are sold. Therefore, the actual cost of the gift to you may be considerably less than the value of the contribution to the College and the amount of your tax deduction.

Please note that to achieve this result, shares must be transferred to the College, not sold, redeemed or exchanged. If they are sold from your account, the gift becomes a cash gift rather than a gift of securities and you will personally realize the capital gains.

When a donor indicates a desire to make a contribution in the form of a marketable security, the Business Office and Development Office should be notified. The preferred method of delivery of stock is by Depository Trust Corporation (DTC). The Business Office will discuss specific DTC instructions with our donor's broker. Ideally, the donor should be directed to advise the broker of intent, and instruct her or him to call the Vice Presidents for Business Affairs and Resource Development at (606) 218-5215 or click here to e-mail our planned giving staff for further details. When the security transaction is complete, the donor will receive a standard gift receipt indicating the value of shares received and the value date.

A gift of closely held securities, such as those of a family corporation, usually qualifies for the same charitable income tax deduction and capital gains benefit as a gift of marketable securities. However, the charitable deduction for gifts of some closely held securities may be limited and may require an appraisal.

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Charitable gift annuity

A charitable gift annuity allows a donor to transfer cash or other property to Pikeville College in exchange for a commitment from the College to pay the donor a specified amount during the remainder of the donor’s life. At the donor’s death, the remaining value of the annuity goes to Pikeville College to be used as the donor stipulated.

Charitable gift annuities provide multiple advantages to the donor that include:

• A fixed annual income,
• Tax-free portions of the income payments,
• Possible increases in income stream from low-yielding investments, and
• Possible capital gains and estate tax savings.

The annuity payment is based on the donor’s age the day the gift is made.

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Charitable remainder trust

Charitable remainder trusts are another method of providing cash or other property to the College, while receiving income during your lifetime. There are substantial tax benefits associated with charitable trusts.

A charitable remainder trust involves an irrevocable transfer of assets to a trustee and is subject to a trust agreement. The trust assets are invested and payments are made to the income recipient. You can designate yourself as the income recipient or it can be paid to one or more recipients. At the termination of the trust (either at death or a set term of years), the remaining trust assets are used to support the work of the College as you designate.

There are two types of charitable remainder trusts, annuity trust and unitrust. The primary difference is how payments to you are calculated. If you are considering this type of trust, please consult professional advisors and our development staff.

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Charitable lead trust

Charitable lead trusts offer a way to reduce income and estate taxes by transferring property to a trust for a fixed period of years. Income from the trust is paid annually to a designated charity for the specified term. The payments can be a fixed dollar amount or a fixed percentage of the fair market value of the trust assets as revalued each year.

The charitable lead trust offers an excellent method to fulfill a pledge in installments. The term of years can be determined to achieve a near 100 percent charitable deduction when the trust is established. After the specified term, the property is returned to you, your estate or distributed to other individuals, such as children or grandchildren, or another charity.

Charitable lead trusts can create dramatic gift and estate tax savings for relatively large estates. It is a way of passing assets to family members at reduced or no gift tax cost while fulfilling your charitable goals.

If you are considering this type of trust, please consult professional advisors and our development staff.

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Life insurance

A life insurance policy is one way to provide a substantial gift to the College at a fairly low cost. And, in some instances, the annual premiums and the cash value of the policy are tax-deductible, earning the insured substantial tax benefits.

There are various methods of including the College in your life insurance plans. One way is to simply list the College as the primary or a partial beneficiary. In this situation, the amount of insurance paid to the college on your passing would become a tax deduction against your estate. Another method would be to make the College the irrevocable owner and beneficiary of the insurance policy. In this situation, you would make an annual contribution to the College equal to the policy premium, and we would pay the premium to the insurance company. You would receive a tax deduction equal to your contribution each year. In addition, at the time the College becomes the owner of the policy, you would receive tax benefits equal to the current cash value of the policy or the cost basis, whichever is less.

If you believe you may be in a situation where a life insurance policy to benefit Pikeville College makes sense for you, we can provide additional information on how to best benefit both you and the College.

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To request additional information, please call the Development Office toll-free at (866) 232 7700 or e-mail our professional development staff at development@pc.edu.