Planned Gifts
Supporting URI’s Future Generation

Planned giving provides a way for donors to enjoy tax advantages, and sometimes income benefits, while contributing to the future of URI. Many people incorporate a planned gift into their estate and financial planning.

Since there is no "one size fits all" approach to making a planned gift, we will be happy to meet with you and your financial advisors to help determine which planned giving option is most advantageous to you.

Membership in the 1892 Society is extended to alumni and friends who have made a provision in their estate plans to benefit URI.

There are several types of planned gifts that can benefit the University, including: bequests in your will or trust, retirement plan gifts, life insurance gifts, life income gifts, life income plans, retained life estates, and charitable lead trusts.

Descriptions of these options are included below.

Bequests in Your Will or Trust
The simplest way to make a planned gift to URI is to name the University as a beneficiary in your will or in a revocable trust. Doing so allows you to:

• direct your bequest be used in any manner you choose;

• choose any portion of your property to pass to URI upon the occurrence of a variety of events, including your spouse’s or children’s deaths;

• retain complete control over your property until your death;

• change the amount you wish to leave URI at any time before you pass away;

• provide for the care of others before URI receives any part of your estate.

Depending on the size of your estate and the amount of your charitable bequest, you may also avoid estate taxes on the bequest itself and may place the remainder of your estate in a lower tax bracket, thereby benefiting your other estate beneficiaries. A bequest provision can be incorporated into your will when you are revising it, or added to an existing will by means of a codicil. Bequests can be:

Specific: You can specify an amount of money or which particular assets, such as securities or tangible property, will be left to URI. You can also designate that a specific percentage of your estate be given to URI.

Residuary: A residuary bequest is that which remains after specific bequests to others, estate taxes, and estate settlement fees are paid.

Contingent: A bequest can be worded to take effect only if certain conditions occur. Typically, a contingent bequest specifies that the gift is made only in the event that your spouse predeceases you.

Sample bequest language is available by clicking here.

Retirement Plan Gifts
You may designate URI as the first or second (after your spouse) beneficiary of your retirement plan, including any individual retirement accounts you may own. This enables you to avoid the taxes imposed upon retirement accounts, which can be considerable.

• First, your heirs will have to pay income taxes on the assets held in your retirement account.

• Second, assets held in a retirement plan, unlike other assets in your estate, will not pass to your heirs (other than your spouse) on a “stepped up” basis. This means that your heirs will likely have to pay capital gains taxes on the accumulated earnings in your retirement plan.

• Third, your retirement account may be subject to an estate tax and possibly a generation-skipping tax, if your heirs are your ultimate beneficiaries. Heirs other than your spouse may receive only a small fraction of your retirement plan.

These taxes can be avoided, however, if the assets from your retirement plan pass to URI. In addition, because the assets grow tax-free until they are withdrawn, the ultimate gift to URI may be more substantial than from other deferred gifts you are considering.

Life Insurance Gifts
Life Insurance may be used in a variety of ways to make a charitable gift to URI. For policies that are paid up (where no more premiums are due), you may transfer ownership of the policy to URI and name URI the beneficiary. In most cases, you will receive a federal income tax deduction equal to the cash surrender value of the policy.

For policies with premiums remaining to be paid, when you give the policy to URI and name the University as beneficiary, you will receive an income tax deduction roughly equal to the cash surrender value of the policy plus a portion of your last premium payment. You will also enjoy income tax deductions on your future premium payments that will be needed to keep the policy in force.

If your employer provides group term life insurance and pays the premiums, you can name URI the beneficiary of that policy and avoid paying taxes on the premiums you would otherwise incur.

Finally, you can name the University the full beneficiary, or a percentage beneficiary, of any life insurance policy you own. You will not obtain a charitable tax deduction, however, without transferring ownership to URI.

Life Income Plans
A life income gift is created when you irrevocably transfer property in exchange for which you (and/or others you designate) receive income, usually for life. While there are several different types of life income gifts, they all share the following advantages:

• immediate federal income tax deduction;

• attractive payment stream;

• avoidance of all or part of the capital gains taxes
  otherwise due upon the sale of appreciated assets;

• estate tax savings and reduced probate costs.

The University of Rhode Island offers two kinds of life income gifts: charitable gift annuities and charitable remainder trusts:

Charitable Gift Annuities: Under the terms of this type of gift, you irrevocably transfer cash or securities to the URI Foundation on behalf of the University. You receive an income tax deduction and will save capital gains tax. The URI Foundation will contract to pay a guaranteed fixed amount each year to you and/or someone you designate as a beneficiary. These payments are backed by the assets of the URI Foundation. The older you are at the time of the gift, the greater the fixed payment. Typically, a portion of each payment is also tax-free.

The annuity payment stream can begin as soon as the gift is made. However, if you don’t currently need the income or want a larger income tax deduction, you may elect to defer the income until a future date. The contracted payment amount will also be greater. At the end of the designated lifetimes, the remainder will be used by the University according to your wishes.

Gift annuities can be funded with minimum gifts of $10,000. Because the payments are fixed, charitable gift annuities are appropriate for donors who want to make a significant gift to URI, but are concerned with maintaining a life income stream that they can count on.

Charitable Remainder Trusts: If you choose this vehicle, you transfer cash, securities, or other types of property, on an irrevocable basis, to a trustee of your choosing. You receive an income tax deduction and pay no capital gains tax on the transfer. During the trust’s term, the trustee invests the assets and pays you, or your designee, each year an income stream for your lifetime(s), a fixed term of not more than 20 years, or a combination of the two. You may choose to receive a fixed dollar amount (annuity trust) or a fixed percentage distribution (unitrust) based upon the trust’s annual current market value. You may also make additional charitable contributions to a unitrust whenever you desire, as it is revalued annually for payout amounts. When the trust terminates, its remaining principal passes to URI to be used for the purposes you designated.

Charitable remainder trusts are typically funded with higher dollar minimums as may be required by the trust manager you choose.

Retained Life Estates
Under a retained life estate plan, you irrevocably deed your home or farm to URI while retaining the right to use the property for your benefit for the rest of your life, a term of years, or a combination of the two. While you retain this right, you continue to be responsible for routine expenses associated with maintaining the property–insurance, property taxes, repairs, etc. When your retained life estate ends, URI can then use your property or the proceeds from its sale according to your wishes.

You are entitled to a present income tax deduction equal to the value of URI’s remainder interest in the property. The deduction amount is determined by the appraised value of the property and your age. If you have owned the property for more than one year, you may also avoid any capital gains taxes that could be assessed should you sell the property rather than donating it to URI.

Charitable Lead Trusts
A charitable lead trust involves the irrevocable transfer of property to a trust that pays an income stream to URI for a period of years, for the lifetime of named individuals, or for a combination of the two. Charitable lead trusts will provide a current income tax deduction and may be established to pay a fixed dollar amount annually to URI (annuity trust) or a fixed percentage distribution (unitrust). When the trust terminates, its remainder interest passes to any non-charitable beneficiary you choose, usually younger family members.

Charitable lead trusts are often used to transfer significant assets to family members at a future date with the intent of avoiding large estate or gift tax consequences. Charitable lead trusts may also be appropriate for reducing income taxes in years that you have unusually high income that places you in a higher tax bracket.

Gifts by will, trust, or beneficiary designation to benefit URI should be directed to the University of Rhode Island Foundation, which has an independent charter for this purpose under state law. The University of Rhode Island Foundation is a tax-exempt corporation (federal tax-exempt ID# 05-6014351) under Subsection 501 (c) (3) of the Internal Revenue Service code and is exempt from all state and local taxes. All gifts to the Foundation are approved deductions according to the schedules established under income tax regulations.