Beneficiaries: In a living trust, the persons and/or organizations who receive the trust assets (or benefit from the trust assets) after the death of the trust grantor.
Bequest: A bequest is a very simple and uncomplicated way to help provide for the future excellence of Wheaton College. A bequest may be of a specific sum, a percentage, or the residue of an estate, and may consist of cash, securities, life insurance proceeds, real estate, retirement plan accounts and/or personal property. A bequest may be made through a will or by a living trust, and should be directed to “Wheaton College, located in Wheaton, Illinois”.
Charitable Gift Annuity: You make an irrevocable gift to Wheaton College in exchange for life income payments. A charitable gift annuity is a contract between you and Wheaton College, under which Wheaton College guarantees payment of the annuity, unlike a trust, which pays the income from its assets alone. Two features in particular make charitable gift annuities appealing. You may specify whether you want an immediate annuity, with payment to begin not later than one year from the date of the gift, or a deferred gift annuity, from which payments are not to begin until a specified future date. In addition, the income stream from such an arrangement can be higher than current market rates.
Charitable Lead Trust: These trusts provide income to Wheaton College for a specific number of years. At the termination of this period, the principal is returned to you or others whom you have designated. Charitable lead trusts can provide significant gift and estate tax deductions.
Charitable Remainder Annuity Trust: Charitable remainder annuity trusts provide that a specified dollar amount (at least 5% of the fair market value of the assets at the time the trust is created) be paid at least once a year to the income beneficiary for their lifetime or for a term of years, not to exceed twenty.
Charitable Remainder Trust: For the irrevocable transfer of cash or property to a trust, you receive a certain percentage or amount of the annual income from the property to you and/or another named beneficiary for life or for a specified term of years. The remainder interest in the property would then pass to Wheaton College and possibly other charitable organizations. You would be entitled to a federal income tax deduction for the value of that charitable remainder interest, which is based on the number and ages of life income beneficiaries and the percentage of payout you and the trustee agree upon. Some advantages of these charitable remainder trusts are: If you fund the trust with appreciated property, you will recognize no capital gain on the appreciation, and the trust will be funded with the full fair market value of the gifted asset. You may designate anyone alive at the time of creation of the trust, including yourself and your spouse, as income beneficiary(ies). The trust itself is not taxed. If the trust is funded with cash or tax-exempt securities, the trustee can purchase or retain such securities to produce tax-exempt income for yourself and/or other beneficiaries. The asset is essentially removed from your estate, which may mean additional tax benefits.
Charitable Remainder Unitrust: This type of trust provides that a fixed percentage (at least 5% of the fair market value of the assets in trust, computed each year) be paid to the beneficiary at least once a year. The unitrust payment to a beneficiary will vary on a yearly basis according to the annual reevaluation of the trust principal.
Durable Power of Attorney for Property: A legal document that gives another person full or limited legal authority to sign your name on your behalf in your absence. Valid through incapacity. Ends at death.
Durable Power of Attorney for Health Care: A legal document that lets you give someone else the authority to make health care decisions for you in the event you are unable to make them for yourself. Also called a health care proxy or medical power of attorney.
Federal Estate Tax Exemption: Amount of an individual’s estate that is exempt from federal estate taxes. In 2006, the exemption amount is $2 million. Under current law, it is scheduled to increase to $3.5 million by the year 2009, disappear in the year 2010 (when the federal estate tax is scheduled to be repealed) and return in 2011 at $1 million.
Gift Tax: A federal tax on gifts made while you are living. In 2006, $11,100 per person per year is exempt from gift tax.
Life Income Gifts: This group of planned gift options, allow you to make a substantial gift to Wheaton College while still retaining income. Life income gifts include: charitable remainder annuity trusts, charitable remainder unitrusts, and charitable gift annuities.
Living Trust: A written legal document that creates an entity to which you transfer ownership of your assets. Contains your instructions for managing your assets during your lifetime and for their distribution upon your incapacity or death. Avoids probate at death and court control of assets at incapacity. Also called a revocable trust.
Pooled Income Funds: The gift is pooled with other contributions to Wheaton College in a professionally managed fund. The donor or other beneficiary receives a proportionate share of the fund’s annual income for life. The income varies depending on how much the fund earns and the number of shares the donor holds in the pool.
Power of Attorney: A legal document giving someone legal authority to sign your name on your behalf in your absence. Ends at incapacity (unless it is a durable power of attorney) or death.
Probate: The court supervised administration of an estate.
Retained life estate: You can give a personal residence, such as a home or condominium, to Wheaton College and retain use of the property for the remainder of your life. You continue to live in the property yet take a charitable income-tax deduction for the “remainder” interest given to charity. You continue to be responsible for taxes, insurance and maintenance on the property until your death. If you choose to move out of the property, the gift is accelerated and you can claim an additional charitable tax deduction.
Revocable Trust: A trust in which the person setting it up retains the power to change (revoke) or cancel the trust during his/her lifetime. Opposite of an irrevocable trust.
Successor Trustee: Person or institution named in the trust document who will take over should the first trustee die, resign, or otherwise become unable to act.
Tax-Deferred Plan: A retirement savings plan (like an IRA, 401(k), 403(b), pension, profit sharing, or Keogh) that qualifies for special income tax treatment. The contributions made to the plan and subsequent appreciation of the assets are not taxed until they are withdrawn at a later time -- ideally, at retirement, when your income and tax rate are lower.
Trust: An entity that holds assets for the benefit of certain other persons or entities.
Trustee: Person or institution that manages and distributes another’s assets according to the instructions in the trust document.
Will: A written document with instructions for disposing of assets after death. A will can only be enforced through the probate court.