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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I think the proceeds / income is related to your age. I was gonna do this at age 40, but it was NOT attractive, and the promoters had some significant fees (comparable to annuity), + you are certainly 'locked' in, as you no longer have control of asset or investment vehicle. I also checked into family foundations, and the annual accounting and reporting issues were prohibitive for my size estate. Thus, I created a 'donor advised fund' in 1999 and have since added to it when windfall profits made sense to do so. It was largely funded by $120/sh stock that had lower than $1 basis. (pre-'most powerful woman' CEO who destroyed an excellent 60 yr old company in less than 5 yrs). I am grateful it was funded at that time. My 'high' earning yrs are over so I don't expect to need tax offsets in the future.(that may change..) In retrospect, (since I was only in my EARLY 40's at the time... and the current real estate snafu was just brewing) I wish I would have used Vanguard, instead of a Community Foundation, I would have had more investment options with lower costs, tho mine are less than 1% annually. If I had a 'crystal ball', I would have invested the 'donor acct' in my own retirement proceeds, and designated some income property to the foundation upon my demise. Funding with assets that could have given me more latitude NOW would have made life easier (for my next 50 yrs in retirement (K-o-W)... Would-a, should-a, could-a...
I would say if you are in your mid 80's and have made your last 'residential move', it might make sense to do your requested bequeath. (noting of course, your comment of a 'rock solid' U (and an advisory committee with stellar results in the last 2 yrs (there are a few institutions who were 'unscathed' in this debacle (I would think it would be the 'great financial schools', but that is not often the case)
But if you went with a reputable university or foundation?
has nothing to do with reputable, it is only based on their investments ability to pay you... unlike an annuity from an insurance company which if they cant pay you the state will.
"unlike an annuity from an insurance company which if they cant pay you the state will."
Really??? The state will pick up the tab if an annuity company insolvent? I honestly never knew that. Do only certain states guarantee an annuity and do they pay 100% or only a portion of the annuity?
most states do, but it pays to check.. i know new york does.... up to 500,000 on annuities and life insurance.. the bottom line of the article reads " All states and the District of Columbia have entities similar to the Guaranty Corporation. Where a licensed foreign insurer becomes insolvent, its state of domicile may have provisions allocating the total benefit between that state’s guaranty entity and the guaranty entity of the insured’s domicile.
Accordingly, while the aggregate coverage provided under Insurance Law § 7708(b) is $500,000, the allocation of liability between the Guaranty Corporation and the analogous entity in the other jurisdiction would be determined in accordance with applicable principles of conflicts of law1. "
When we sold an owned asset many years ago, our Financial Advisor set us up with a Charitable Remainder Trust.
We wanted to leave something to a vet med program at our local university, so that worked out well. The way our CRT is structured, our Financial Advisor controls the investment. He (and we) decide what to invest it in. We also set it up so that it pays out 7% of it's value to us annually, and that payout began on my wifes 50th birthday, (last June).
Upon the death of the whichever of us survives the longest, the university will receive whatever remains in the trust.
The university wasn't too thrilled with the 7% (vs a more standard 5%), but we sort of told them take it or leave it, we could always find another charity to give it to. They fell into line.
The CRT did several things for us. The owned asset we had contained a significant amount of gain. Had we sold it and taken the money we would have paid a huge amount of income taxes. By transferring it into the CRT before selling it, we avoided the income taxes. In addition, we received a surprisingly large tax refund because in essence, we had just donated that asset to charity. There's a very complex formula that is applied regarding value of the asset, your age, expected value at your death, etc. I don't understand it, but my Financial guy and our CPA do and that's what counts.
One more thing, they're very complex and very easy to make mistakes on. Please make sure you use someone who has set them up successfully before. Mistakes are sometimes not recoverable and costly. Also make sure your CPA (or whoever does your taxes) understands them as well since the CRT has to file a separate tax return annually.
I have several properties that I would pay huge amounts on capital gains and recaptured depreciation if I don't do a 1031, so this interests me - I also understand you can take a charitable deduction -- does that include the recaptured depreciation?
I have several properties that I would pay huge amounts on capital gains and recaptured depreciation if I don't do a 1031, so this interests me - I also understand you can take a charitable deduction -- does that include the recaptured depreciation?
Thanks.
I believe it does, but I'm not positive. The owned asset we transferred into the CRT was a rental property we had owned for 25+ years.
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). I am grateful it was funded at that time. My 'high' earning yrs are over so I don't expect to need tax offsets in the future.(that may change.
.) In retrospect, (since I was only in my EARLY 40's at the time... and the current real estate snafu was just brewing) I wish I would have used Vanguard, instead of a Community Foundation, I would have had more investment options with lower costs, tho mine are less than 1% annually. If I had a 'crystal ball', I would have invested the 'donor acct' in my own retirement proceeds, and designated some income property to the foundation upon my demise. Funding with assets that could have given me more latitude NOW would have made life easier (for my next 50 yrs in retirement (K-o-W)... Would-a, should-a, could-a...
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