Legacy Giving

Life insurance

Life insurance can be an excellent way for a donor to leverage their cash donations to Sun Valley Community School. By either naming Sun Valley Community School as a beneficiary or gifting a policy to the school outright, a donor can provide the school with a meaningful contribution and ensure that Sun Valley Community School continues to do what it does best: educate young men and women.

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.

Bequests

The most common form of a deferred or planned gift to support Sun Valley Community School is a bequest contained in a donor's will or revocable living trust. A charitable bequest is a written statement in a will, which directs that a gift be made to a charity that the donor cares about after the donor's lifetime.

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.

Charitable IRD Assets

Income in Respect of a Decedent (IRD) is taxable income to which an individual was entitled, but did not receive before his or her death. An IRA is a common example of IRD assets, but IRD assets also include other qualified pension assets and other types of assets. For many individuals, a gift of IRA or other IRD assets is one of the more common and tax-advantaged ways to make a planned gift.

Tax advantages of making charitable gifts of IRD assets can be significant. Charitable gifts of IRD assets do not incur income or estate taxes, and there is an unlimited charitable deduction. For persons whose estates are subject to significant taxation, heirs may realize as little as 20 percent of the original value of IRD assets because of combined state and federal taxes. (By contrast, when heirs inherit appreciated assets such as stocks and real estate, they receive a “step-up” in basis on the assets as of the date of death of the owner.) Thus, it often is beneficail from a tax perspective to give IRD assets to charity and other assets to heirs.

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.

Charitable Remainder Annuity Trust

You can establish a charitable remainder annuity trust (CRAT) that benefits Sun Valley Community School by irrevocably transferring assets—cash, securities, or other property— to a trustee who subsequently makes fixed annual payments to you and/or other beneficiaries. At the end of the trust term, the remaining assets go to Community School for a mission-aligned purpose which you designate.

The amount of the annual payment to you and/or other beneficiaries is determined when you establish the trust. (Annual payments must be at least 5 percent of the trust assets' initial fair market value and are most often taxable to the beneficiaries.) There can be substantial tax advantages to establishing a CRAT, in addition to supporting a cause you care about.

Potential BENEFITS

• Receive fixed annual payments for a specified time period
• Reduce capital gains tax on the transfer of appreciated assets
• Obtain an income tax charitable deduction
• Minimize estate taxes
• Choose who administers your gift and invests its assets
• Support Sun Valley Community School

Example: Mr. Smith owns appreciated securities that originally cost him $30,000 and are now worth $100,000. He donates these securities to Sun Valley Community School to fund a charitable remainder annuity trust, naming his wife, age 65, as the lifetime beneficiary. The trust agreement provides for annual payments to Mrs. Smith of 5.3% ($5,300/year) of the initial trust principal for life. Mr. Smith qualifies for an income tax deduction of more than $37,000. Additionally, he avoids the tax on the $70,000 in appreciation that would have resulted had he sold the securities. At the end of Mrs. Smith’s lifetime, the trust principal will pass to Sun Valley Community School for the purpose designated by Mr. Smith (e.g. scholarships or endowment).

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.

CHARITABLE REMAINDER uniTRUST

You can establish a charitable remainder unitrust that benefits Sun Valley Community School by irrevocably transferring assets—cash, securities, or other property— to a trustee who subsequently pays a percentage of the unitrust's value each year to you or another beneficiary. At the end of the trust term, the remaining assets go to Sun Valley Community School for a mission-aligned purpose which you designate.

Each year, you receive a fixed percentage of the unitrust's current value, as determined annually. If the unitrust gains in value, the annual payment will increase proportionally—providing a potential hedge against inflation. Likewise, if the unitrust's value decreases, the payment amount will go down. A unitrust provides more flexibility than many other life income plans and also offers important tax advantages.

POTENTIAL BENEFITS

• Provide a designated beneficiary with income
• Realize the possibility of income growth
• Eliminate capital gains tax on the transfer of appreciated assets
• Obtain an income tax charitable deduction
• Reduce estate taxes and probate costs
• Choose who administers your gift and invests its assets
• Support Sun Valley Community School

Example: Mr. Smith, age 68, transfers appreciated securities that cost him $100,000 and are now worth $500,000 to a unitrust with an annual payout rate of 6 percent. He is to receive payments for life. At the end of his lifetime, the unitrust assets will create a scholarship endowment at Sun Valley Community School. Mr. Smith's charitable deduction is about $236,800, and it can be used over six years. Under the provisions of the trust agreement, Mr. White's first annual payment will be $30,000, a significant portion of which may be taxed at the lower 15 percent capital gains tax rate. In year two, assuming an 8 percent total annual investment return, the trust will have a principal balance of $510,000, and the payment will be $30,600. Assuming the same 8 percent total return, the payment in year three will be about $31,200, and so on for life. Mr. Smith may also completely avoid the tax on the gain he would have incurred had he sold the property instead of donating it.

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.

Charitable Lead Trust

A charitable lead trust is often viewed as the opposite of a charitable remainder trust. Like a charitable remainder trust, charitable lead trusts offer a reduction in capital gains tax as well as other potential tax deductions. The difference is that Sun Valley Community School receives a fixed income or a percentage of the trust's value during your lifetime, and after your lifetime, your named beneficiaries receive the remainder of the trust’s assets.

POTENTIAL BENEFITS

• Reduce capital gains tax on the transfer of appreciated assets
• Receive an income tax charitable deduction
• Minimize estate taxes
• Choose who administers your gift and invests its assets
• Support Sun Valley Community School

Example: Mr. Smith puts $1,000,000 in a twenty-year charitable lead trust to benefit Sun Valley Community School. The trust agreement stipulates that the School is to receive $70,000 annually according to the trust agreement. At the end of the twenty-year term, Mr. Smith’s son, John, is to receive the trust principal. For tax purposes, only the remainder interest is subject to tax. In this case, the IRS estimates that the value of the trust principle (according to Treasury tables) to be about $222,500. In actuality, the trust principal grows to $2,597,000 (assuming a 3 percent annual net return), and this is what John receives. The difference between the value of the remainder interest and the actual trust value is about $2,375,000, which passes to John, free of transfer tax, and Mr. Smith is only obligated to pay tax on the value of the remainder interest ($222,500).

Sun Valley Community School recommends consulting with a tax professional, lawyer, and/or financial advisor for guidance if you are contemplating a legacy gift. For more information, please contact the Development Office.