Other Ways to Support St. Mary’s

Outright giving is a popular method of making a donation to St. Mary’s because of the income tax advantages. Giving appreciated securities or property to the Seminary may entitle you to an income tax deduction for the full fair market value of the security or property, while allowing you to avoid the capital gains tax on the appreciation.

Increasingly, more alumni and friends are remembering St. Mary’s in a personal and enduring way by naming the institution as a beneficiary in their wills. A will allows you to make a more substantial contribution than might otherwise be possible, while at the same time permitting the most flexible use of available resources during your lifetime. The following are some specific ways to include St. Mary’s in your will.

• The most flexible way to make such a gift is to leave a percentage of your estate to St. Mary’s. By leaving 15%, for example, the gift automatically changes with the size of your estate.
• A specific bequest allows you to designate a specific sum of cash, securities, or property to St. Mary’s. Although this type of bequest is straightforward and uncomplicated, it is not always best because the size of your estate may fluctuate. If you choose to do a specific bequest, you may need to review your will periodically to account for changes in financial status.
• With a residual bequest, St. Mary’s receives the balance of your estate after expenses; liabilities and bequest to other beneficiaries have been fulfilled.
• Finally, a contingent bequest would allow you to make a bequest contingent upon a specific occurrence. For example, you can make a bequest to a relative with the contingency that if the relative is deceased when your will is probated then your bequest passes to St. Mary’s.
• With any type of bequest the key is planning ahead. You will need to enlist the help of an attorney to draw up a valid will; however, there are a few things you should do before the first visit that will help reduce time and expenses.
  • Make a list of your property. This includes real estate, life insurance, securities, works of art, etc.
  • Note how you would like these things allocated. Do you have any specific wishes for the property? List the people you would like to remember, along with their ages, addresses, and relationships to you.
  • List the full legal names and addresses of the charitable organizations you would like to benefit.
  • Name an executor and an alternate executor in case the executor is unable to serve. It can be a family member, friend, a trust company, or a corporation. The executor will handle the payment of your debts and the distribution of the estate. In order to help your executor with this sometimes-difficult process, make a list of all your property with its location and value. Keep the list where it will be easy to locate and remember to update it periodically.
  • Gather together your recent income tax records, social security number, company pension and profit-sharing information, bank and brokerage statements, deeds for real estate, and life insurance policies to take with you to the attorney’s office.

• Giving through life insurance is a simple and effective means of remembering the Seminary. It provides St. Mary’s with an immediate gift at the time of death because it is not subject to probate or settlement delays. There are several ways to use your life insurance to benefit St. Mary’s. The Seminary can be named as any of the following:
  • Primary beneficiary;
  • Co-beneficiary, to share the policy proceeds with someone;
  • Secondary beneficiary, to receive funds if the primary beneficiary is already deceased;
• Aside from naming St. Mary’s as a beneficiary of an existing policy, there are several ways life insurance can be used in charitable giving.
  • Give a fully paid-up whole-life policy which you already own by changing the owner and beneficiary to St. Mary’s. This allows for an immediate income tax deduction for the fair market value of the policy, limited by your cost basis.
  • Assign your annual policy dividends to St. Mary’s. This allows you to deduct the dividends as charitable gifts on your income tax return.
  • Purchase a new policy with St. Mary’s listed as owner and beneficiary. You can take a tax deduction for the premiums you pay on the policy.
  • Give a whole-life policy where you are still paying premiums. If you name St. Mary’s as irrevocable owner and beneficiary, you may deduct future premiums as charitable gifts as well as an amount approximately equal to the cash surrender value (or the premiums paid, if less) at the time the gift is made.

You will need to obtain a qualified appraisal of the donated policy. If you have any questions about setting up an insurance policy or the tax benefits, contact your life insurance agent, accountant or attorney.

Designating the Seminary as a beneficiary of your retirement plan, including an IRA, 401(k) account, or 403(b) plan, is an easy and tax efficient way to benefit St. Mary’s. Distributions from a tax-qualified retirement plan are generally taxable to beneficiaries as ordinary income. Because it is a charitable organization, St. Mary’s will not pay income tax on the retirement account and will benefit from its full value. Funding your bequest to the Seminary from your retirement plan may result your heirs receiving assets without an income tax burden, thereby resulting in a greater net inheritance for them. The Seminary can be named as the sole primary beneficiary of your retirement plan, as a co-beneficiary, or as a contingent beneficiary, similar to life insurance policy designations. It is not recommended that you name your estate as beneficiary of your retirement plan or that you direct that your retirement assets be used to fund a monetary bequest to St. Mary’s in your Will.

A charitable gift annuity is a contract between you and St. Mary’s, whereby you irrevocably give cash or property to St. Mary’s with the agreement that St. Mary’s will pay you and/or your beneficiary a set dollar amount for life. The charitable gift annuity does not involve a trust; therefore, St. Mary’s has immediate use of the gift. Your benefits can be immediate or deferred.

For an immediate gift annuity, you will be paid a fixed percentage of the value of your annuity which is based on the age of each beneficiary (up to two individuals). You will receive an immediate tax deduction the year you make the contribution and part of the payments you will receive each quarter will be tax free. The annuity rate and the amount of your deduction increases with the age of each beneficiary.

With a deferred charitable gift annuity, you would decide when you want to begin receiving payments from the annuity (any time after your sixtieth birthday). You would still take a tax deduction for the annuity the year you make the gift, but because you are deferring the payments you may receive a larger tax deduction, as well as larger annuity payments when they start. The deferred annuity is a good option for a younger donor who would like to receive an immediate charitable income tax deduction and would like to supplement his or her income during retirement.

A charitable remainder trust is another excellent option for supplementing your income while providing a gift to St. Mary’s. With a charitable remainder trust, you give cash, appreciated securities, or other liquid assets to a trustee (either a trust company, a lawyer, or someone with knowledge of trusts) with the understanding that the trustee will pay you and/or one or more beneficiaries an annual amount for each beneficiary’s life or a period of years (not to exceed 20). After the death of the last beneficiary (or the expiration of the term of years), the trust is terminated and the remainder passes to St. Mary’s. You will receive a charitable income tax deduction the year the trust is established for the current value of the remainder interest. There are two types of charitable remainder trusts. They differ in the way the annual payment is calculated.

The charitable remainder annuity trust will pay you annually a fixed amount of the trust’s initial value. For example, you could establish a trust for $100,000 with a 5% annuity payment ($5,000/year). If the trust appreciates to $150,000, you would still receive $5,000 per year. Additional trust earnings and appreciation not paid to you would be added to the trust principal. Likewise, if the trust experiences a deficit, the payments would be deducted from the principal. A charitable remainder annuity trust cannot accept additional gifts once established.

A charitable remainder unitrust will pay you a fixed percentage of the trust’s assets as valued annually. For example, you could establish a trust for $100,000 with a 5% unitrust payment. If the trust appreciates to $150,000, you would receive a payment of $7,500 for the year. Likewise, if the trust depreciates to $80,000, you would receive $4,000 for the year. A charitable remainder unitrust can accept additional gifts once it is established.

A charitable lead trust is the opposite of a charitable remainder trust. With a lead trust, St. Mary’s would receive payment from the trust for a predetermined number of years, after which time the trust would terminate and the remainder would pass to named remainder beneficiaries (usually your family members). This type of trust may remove assets from your estate while allowing the appreciation to pass to a family member either tax free or at a reduced tax rate while helping St. Mary’s. The gift and income tax consequences of charitable lead trusts can be complex, so you should consult your tax advisor.

In order to help plan for St. Mary’s future, let us know if you have included the Seminary in your estate planning. As required by mandate from St. Mary’s Board of Trustees, any revenue over $5,000 received from estate gifts will be designated to St. Mary’s School of Theology Endowment, unless the donor specifies otherwise. Some donors have restricted their gifts for special purposes, such as the Knott Library renovations, seminarian scholarships, St. Mary’s Ecumenical Institute, St. Mary’s Chapel renovations, and St. Mary’s Center for Continuing Formation to name a few. If you have a special interest in St. Mary’s and would like to restrict your gift, please make your intentions clear on all legal documentation and alert the Office of Institutional Advancement of your decision. St. Mary’s respects the privacy of our benefactors and will keep your gift confidential if requested.