George Fox University: Questions & Answers

For the answers to more questions, contact Al Zimmerman at azimmerman@georgefox.edu or 503-554-2106. Financial and tax deduction calculations, customized gift plan proposals and counsel are available at no charge or obligation.

Must I use an attorney to prepare my will?
In Oregon a person can prepare his/her own will. To be valid a will must be made in writing. It need not be written by the testator. It may be written in any language, by hand or by any other means. However, it is generally not advisable to prepare your own will. Many "homemade" wills have been declared invalid by the courts. There is really no substitute for the professional expertise of a competent attorney. It is far better to be able to sleep at night knowing your affairs are in order and your wishes will be fulfilled.

Is it true that most people don't have a will? What happens when people die without a will?
Yes. Published reports over the years have indicated that 50-70% of people do not have valid wills or estate plans. The laws of the state in which you die determine how your estate will be distributed.

Some assets are described as nonprobate property - assets not governed by the laws of probate. These assets will go to those persons designated as recipients on a beneficiary designation form. Joint bank accounts, life insurance, retirement funds are some examples of nonprobate property.

Oregon law ( ORS 112.025 to 112.055) determines how your assets will be distributed. If you die survived by your spouse without children, your spouse gets all your property. If you are survived by a spouse and children, your spouse gets 50% of your property and your children share the remaining 50%. If you have no children or other relatives, the state of Oregon becomes your sole heir. All your probate property will be distributed to the Division of State Lands. For more information about the lines of succession, consult an attorney.

If I include George Fox in my will, do I need to let anyone know about it?
You need not tell George Fox of your plans. However, we appreciate knowing that you have included the university in your estate plan so that we can be sure that the designated purpose of the gift is appropriate and useful for the university. We do like to show our appreciation to donors who include George Fox in their estate plans - the Henry Mills Society recognizes those who have named GFU in their will or living trust or established a planned gift benefiting George Fox.

By becoming part of the Henry Mills Society, you will enjoy the personal satisfaction of knowing you have a part in preparing future generations to interact with the world with scholarship, character, and faith. When we receive notification that you have included George Fox University in your gift plan, you will be enrolled in the Henry Mills Society. This is one way we can express our thanks to you today for the support you will provide for George Fox in the future.

How can I include George Fox in my estate plan?
You can designate in your will or living trust that your assets are to be used for the benefit and support of George Fox University .

Your bequest in support of George Fox University may be for a specific dollar amount, a percentage of the total estate, or the residual amount remaining after all specific expenses and other bequests have been paid. Suggested language for making a bequest for George Fox.

Bequests can take various forms. It is important to consult with your attorney to determine whether your charitable bequest can be made by drafting a codicil to your existing will or if a new will is needed.

Will my estate be subject to estate tax? Can a will or living trust reduce estate taxes?
The estates of most people will not have to pay any estate tax. There is an unlimited marital deduction so everything your spouse inherits is not subject to estate tax when you die. A credit shelters estates up to $2 million in 2006-08 and $3.5 million by 2009. Congress will likely pass legislation to change the estate tax considerations in the next few years. Your gross estate includes everything you own at date-of-death value. Oregon and many other states have a "pick-up" estate tax that is imposes a state tax at a lower amount. There is an Oregon estate tax on estates over $1 million.

Neither a will nor a living trust can, by themselves, eliminate estate taxes. With proper planning, the federal estate tax on estates with values between $2 million and $4 million can be eliminated for husbands and wives (2006). This is up to twice the exemption amount for any given year. This is done through A/B Trust planning through the couples will or the establishment of credit shelter and marital trusts during life. With proper planning, the federal estate tax on estates valued in excess of $4 million can be dramatically reduced.

At George Fox University , we are committed to the estate planning process, and we want to make the process easy for you. As a service to our alumni and friends, we offer comprehensive, confidential, and complimentary estate design consultation. You may also wish to c onsult with your attorney for more information about effect estate planning techniques.

I don't have anyone to serve as my personal representative in my estate plan. What can I do?
When you make your will, you will name a personal representative (executor) to take care of your estate during probate, insure that all bills are paid, gather all your property, collect all money owed to you and see that your estate gets to the people named in your estate. Because of the amount of work and detail required, it is important to name your personal representative with care.

Your personal representative can be a member of the family or a friend. Many banks and trust companies will act as a personal representative for a fee. A non-profit organization, such as George Fox University, may serve as personal representative. If so, all fees for serving as personal representative may be waived, especially if George Fox is also benefiting from the estate

The Director of Planned Giving, by title, may be named as personal representative or successor trustee. The university will carefully consider the duties and obligations related to a particular estate before consenting to serve in this capacity. Consult the Office of Estate and Planned Giving for more information about this service to friends of George Fox University.

What are life income gifts?
A life income gift plan allows you to make a gift to George Fox University while provide income for yourself or others for a period of time before the university is permitted to use your gift. You may make a life income gift to the university by irrevocably transferring securities, money, or other property to George Fox. The university then manages the investment of the assets and pays an income to you, your designated beneficiaries, or both. The income payments continue for the beneficiary's life or for a term of up to twenty years. After the income payments end, George Fox receives the fund principal. Charitable remainder trusts and charitable gift annuities are examples of life income gifts.

I am not "rich." Are planned gift meant for me?
Many people are surprised by what they do own. Wealth is not necessarily measured by what is in one's bank account. One may live in a very modest home, but own land, stocks, tangible property, collectibles, art, life insurance policies, etc. Each of these assets may be a way for you to make a significant charitable gift and realize tax savings. You may also benefit from the additional income generated by a planned gift.

Planned gifts are not just for the "rich." The minimum amount needed to establish a GFU gift annuity is $5,000. The additional income from a planned gift could provide the financial security needed for an enjoyable retirement.

What are the tax advantages of life income gift plans?
Gifts to George Fox University , as to other charitable organizations, are not subject to gift or estate taxes. For example, a $10,000 bequest to a charity results in the charity receiving the full $10,000, free of tax.

A gift of appreciated property, such as stock or real estate, generates a double tax benefit. In addition to receiving a charitable income tax deduction for the full fair market value of the property, the donor escapes any potential tax on the capital gain element of the property. The property must have been held for more than one year to reap this benefit.

In the case of life income gifts, an income tax deduction for the current value of the "remainder interest" in the donated assets is available. The sale of appreciated assets after transfer to a life income arrangement does not give rise to any capital gains taxes on the sale. The treatment of capital gains within the gift plan varies according to the type of planned gift. The use of a planned gift is a good way for a donor to avoid the capital gains tax penalty that would normally be incurred on the sale of appreciated assets.

What if I can't use the entire tax deduction from my planned gift?
For those who itemize their deductions, gifts of cash are deductible up to 50% of the donor's adjusted gross income. Gifts of long-term capital gain property (stocks or real estate owned more than one year) are deductible up to 30% of the donor's adjusted gross income. Contributions that exceed the percentage limitations may be carried over for deduction in the five succeeding tax years.

In the case of life income gifts, an income tax deduction for the current value of the "remainder interest" in the donated assets is available. The remainder interest is calculated according to formulas provided by the IRS. The GFU planned giving staff will provide these calculations for you and your accountant.

Do I need a tax advisor to help me set up a planned gift?
The GFU Office of Estate and Planned Giving can provide detailed information, including draft language, for your attorney or other advisor regarding gifts to George Fox. It is recommended, of course, that you involve your personal tax or legal advisor in reviewing gift proposals, financial projections, and calculations provided to you. We can often work together with you and your advisors to design the most effective planning strategies for your benefit and the benefit of the university.

What are the best assets to use for a planned gift?
Cash is the simplest, most direct, and most popular type of gift - even for a planned gift. Cash and other high-basis assets make excellent gifts for gift annuities because they create more tax-free income.

Gifts of appreciated property, such as stock or real estate, are often the best choice for a planned gift because they generate a double tax benefit. In addition to receiving a charitable income tax deduction based upon the full fair market value of the property, the donor escapes any potential tax on the capital gain element of the property. The property must have been held for more than one year to reap this benefit.

In the case of life income gifts, an income tax deduction for the current value of the "remainder interest" in the donated assets is available. The remainder interest is calculated according to formulas provided by the IRS. The GFU planned giving staff will provide these calculations for you and your accountant.

How old do I need to be to consider a planned gift?
Age is not necessarily the best criteria to consider when evaluating the suitability of planned gifts. The key question is what stage in my life planning am I in?

Older seniors may be looking for the guaranteed and fixed income of a gift annuity. Recently retired seniors may be looking to convert appreciated assets into a variable income stream that will grow over time and not be subject to the inflation penalty.

Younger donors may look to a deferred gift annuity to supplement their retirement planning options. A deferred gift annuity established now creates a tax deduction now and secure retirement income with a high payout when you need it.

Consult the Office of Estate & Planned Giving for information about the various planned giving options that may be best suited to you.

How can a planned gift be used to supplement my retirement planning?
Income for retirement is usually considered to come from Social Security and a pension or a qualified retirement plan such as a 401(k) or tax sheltered annuity provided by your employer. However, a life income gift plan, such as a gift annuity or charitable remainder unitrust, can provide substantial additional income for retirement and tax savings now. Often the best assets to use to provide more retirement income through a planned gift are appreciated assets such as real estate or securities.

What if I don't know when I am going to retire or need the income from my planned gift?
Planned gifts can be very flexible planning tools. An elective start (flexible) gift annuity can include a number of potential dates when the gift annuity payments begin. The longer you delay the beginning of the annuity payments, the larger those payments to you will be.

One type of charitable remainder unitrust (FLIP unitrust) can be designed to create substantial tax-free growth and begin the trust payments to you when you retire or on a date you select. Consult the Office of Estate & Planned Giving for information about the various planned giving options that may be best suited to you in planning for your retirement years.

How can a planned gift help me achieve balance & diversification in my portfolio?
The key advice provided by most financial advisors is to have a diversified portfolio of investments. Some assets should be fixed income investments (bonds, CDs) and others should be variable investments (stocks, mutual funds, etc.). Gift annuities can provide the security of fixed payment investments, as well as tax savings. Charitable remainder unitrusts can provide the growth to overcome the effects of inflation.

Why are the payments from a gift annuity partially tax-free?
A gift annuity is a bargain-sale. It involves the purchase of a gift annuity and a charitable gift to George Fox University . A portion of each annuity payment to the beneficiary (annuitant) represents a return of the donor's investment in the contract and is tax-free.

Can a planned gift be used to help my grandchildren attend college?
Yes, you can make a charitable gift through George Fox University that can also provide assistance for your grandchild's college education. The college annuity plan involves a deferred gift annuity which is a contract between GFU and the donor to provide an income for life beginning at some date in the future selected by the donor. By deferring the start of the annuity payments, the annuitant (beneficiary of the annuity payments) receives larger payments than if the payments started immediately.

The donor (grandparent) contributes funds or appreciated stock to a deferred gift annuity and designates a grandchild as the annuitant to receive the annuity payments. The deferred gift annuity is usually established when the grandchild is young (age 1-10). The grandson or granddaughter is entitled to a stream of payments for life (usually beginning at age 18 when the child will enter college), but has the option to exchange the annuity with George Fox for a lump sum payment or installment payments spread over four or five years. The grandchild will probably use the funds to attend college, but they could use the funds for some other purpose. After the annuity has been paid, the remaining funds benefit George Fox University .

The donor (grandparents) receives an income tax deduction in the year the gift annuity is established.

My elderly parents could use some additional income. Can I use a planned gift to provide additional income to them?
Yes. A gift annuity is an excellent plan to create additional income to meet the needs of a family member. The beneficiary of a gift annuity need not be the donor. You may name anyone (a parent, sibling, friend, or an employee) as the beneficiary of a gift annuity.

You may be caring for a parent or relative with after-tax dollars. It may be advantageous to transfer some cash or property to a gift annuity and have the annuity payments made directly to the parent. The income will be taxed in the parent's lower tax bracket, but you, the donor, receive a current income tax deduction that reduces your income tax liability.

The age of the recipient of the annuity payments, rather than the age of the donor, determines the annuity rate, tax deduction, and tax-free amount of the annuity payments.

George Fox University | Office of Development | Estate and Planned Giving | Questions & Answers

Questions and Answers