Ways to Make a Gift

Cash

The most common way to make a gift is by check. All checks should be made payable to “Michigan State University”. To ensure that your gift is used as you wish, please include a note stating your designation. In making a gift to the University, you can use a credit card and call in the donation, use the online form, or specify that an automatic charge is to be made periodically.

Securities

Gifts of securities, such as stocks, bonds and mutual funds, can be a tax-advantaged way to support the College because they can be donated without paying any capital gains taxes. Moreover, if a donor has held such stocks for more than one year, he or she can claim a tax deduction based on the fair market value of the securities–even though they may have been purchased for only a fraction of that amount.

Securities held less than one year also can be donated, qualifying for a deduction typically based on what the donor paid for them. Gifts of securities typically involve publicly traded shares, such as those traded on the major exchanges, over-the-counter, and most common mutual funds. Gifts of privately held stock are also possible.

Real Estate

Real estate gifts can be another tax-advantaged way to support the College since they can also be donated without paying any capital gains taxes. Moreover, if a donor has held the property for more than one year, he or she can claim a tax deduction based on its fair market value–even though it may have been purchased for a fraction of that amount. Property held less than one year may also be donated, qualifying for a deduction typically based on what the donor paid for it.

There are a variety ways in which real estate can be donated. It can be used to make an outright gift, allowing an endowment, capital project, or other needs to be funded right away. Or through Planned Giving, it can be used to fund a life income gift, paying the donor, and perhaps others, an income stream for life with the remainder being used to support the College. Also through Planned Giving, donors can contribute a remainder interest in a residence or a farm, enabling them to make a gift to MSU today while still living in their house or on their farm for the rest of their lives.

While the requirements to make a real estate gift vary, depending on the type of gift being considered, at least three steps are typically required: an appraisal of the property’s value; an assessment of any environmental risks posed by the property; and the preparation of a deed that actually transfers the property.

Gifts in Kind

Gifts of personal property can also provide valuable support to URI. Artwork, antiques, books, and any other form of property can be important donations to the University, which has a great need for a wide variety of items. Paintings, sculptures, and antiques beautify the campus and enhance students’ artistic appreciation. Books and manuscripts add to the University Library collections. Equipment provides laboratories with the needed resources for students to test their knowledge.

The tax benefits for gifts-in-kind can be similar to gifts of money or securities. If the property is used for the University’s educational mission, the donor can deduct the property’s full fair market value, provided the donor has owned the property for more than a year. Otherwise, the donor can still deduct the property’s cost basis, an amount that usually equals the price the donor paid for the property.

In choosing to make a gift to the College of Natural Science, donors may also want to consider the following:

Matching gifts Many employers sponsor matching gift programs that they make available to employees, employee spouses, retirees, and board members. By following your company’s guidelines, the value of your gift may be doubled or tripled.

Memorial Gifts A gift made in memory or in honor of a teacher, student, relative or friend is a generous and thoughtful gesture recognizing an individual’s life and accomplishments.

When an honorary or memorial gift is made, the Development Office notifies the honoree or next of kin. To make an honorary gift, please send a letter indicating the purpose of your gift as well as the name and address of the honoree. For memorial gifts, if a memorial fund has not previously been established, your check should include the name of the honoree and the name and address of his/her next of kin.

NatSci Advancement Office staff will work with you to find a creative way of giving that is beneficial to you, your family, and the College. They have years of experience and are pleased to explore possibilities with donors or with donors’ legal or financial advisors. You can contact the staff at (517) 353-9855.

Planned gifts provide a way for donors to enjoy tax advantages, and sometimes income benefits, while contributing to the future of the College of Natural Science. 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 Landon Society is extended to alumni and friends who have made a provision in their estate plans to benefit the College of Natural Science.

Types of Planned Gifts

• Bequests in Your Will or Trust
• Retirement Plan Gifts
• Life Insurance Gifts
• Life Income Plans
• Retained Life Estates
• Charitable Lead Trusts

Bequests in Your Will or Trust

The simplest way to make a planned gift to MSU 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 MSU 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 at any time before you pass away;
• provide for the care of others before MSU 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 MSU. You can also designate that a specific percentage of your estate be given to MSU.

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.

Retirement Plan Gifts

You may designate MSU 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 MSU. In addition, because the assets grow tax-free until they are withdrawn, the ultimate gift to MSU 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 MSU. For policies that are paid up (where no more premiums are due), you may transfer ownership of the policy to MSU and name MSU 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 MSU 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 MSU 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 MSU.

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.

MSU 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 University. You receive an income tax deduction and will save capital gains tax. MSU 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 MSU. 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 MSU, 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 MSU 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 MSU 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, MSU 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 MSU’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 MSU.

Charitable Lead Trusts

A charitable lead trust involves the irrevocable transfer of property to a trust that pays an income stream to MSU 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 MSU (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 MSU should be directed to the MSU Office of Planned Giving.

The NatSci Advancement Office staff will work with you to find the best way of giving that is beneficial to you. They have years of experience and are pleased to explore possibilities with donors or with donors’ legal or financial advisors. You can contact the staff at (517) 353-9855.