As you confront the challenges of the future, the Minnesota Professional Engineers Foundation knows that your generosity can make all the difference in the success of our mission to support the goals of engineering students.
We offer membership in the Legacy Society for individuals and families that have included MPEF in their will, estate plan, or planned gift. You may remain anonymous if you choose. Join by completing the Legacy Society form.
But MPEF also wants to make sure that you will benefit as much as possible from making a gift.
Of course, you have the satisfaction that comes from knowing you’ve made a difference in the lives of engineering students. But in fact, the best gift plans also improve your financial and tax situation, often right away.
There are many ways that your philanthropic giving can blend with your own financial needs and tax planning. The following vehicles will allow you to explore the possibilities and opportunities for charitable gift planning.
Start Planning Today
There are several ways to structure a gift so that there is no impact on your current income. Perhaps the easiest way to make a gift is to create a bequest in a will that simply designates some percentage, or dollar amount, of the remaining estate to MPEF. In addition, certain annuity vehicles can provide income during a donor’s lifetime, which can be a significant help to the donor’s current circumstances.
Any person, regardless of age, can honor and advance the engineering profession through a planned gift. A gift can be structured for nearly any circumstance. The best gift is one that fits your particular situation and desires, and that reflects your values.
To design a gift that benefits the people and organizations you care about most, always be sure to obtain the professional counsel of someone that specializes in gift and estate planning. MPEF can work with your advisors to help you plan for tomorrow and receive maximum benefits today.
Find more information below or contact us to create a personalized plan.
What You Will Need
A Current Will
Have you put off making or updating your will? Maybe you think it costs too much to make a will. Perhaps you’re having a hard time deciding about how to leave your money. Or you may simply have an aversion to confronting your mortality.
Drafting a will may seem like a daunting task at first, until you realize all the good that comes from having a will.
A bequest in your will lets you pass any amount you wish to MPEF free of estate tax. You can give cash or specific property, a dollar amount or a percentage of your estate, with restrictions or without.
To make sure your will accomplishes your goals according to your wishes, be sure to obtain professional counsel specializing in probate and estate planning.
- Lets you provide for your family after your death
- Allows you to distribute your assets according to your wishes
- Saves on estate taxes, with proper planning
- Lets you leave a legacy without giving up assets.
A Living Trust
A living trust lets you provide for yourself and your family before and after your death. It has built-in flexibility that can work very well with your overall estate plans, because it allows you to stay in control of your assets.
Like wills, living trusts are fully revocable, so you can change or terminate them at any time during your life. But unlike wills, the terms of a living trust can be put into effect immediately.
You can also arrange a contribution to MPEF through a living trust by naming it as the ultimate beneficiary. The method of giving is attractive because you still have complete control of the assets during your lifetime.
- You or a beneficiary receive the income from the trust assets
- You’re in charge, but a professional trustee may do the detail work
- You name who will ultimately receive the trust remainder
- The trust assets bypass probate, so the terms are private
- Assets in the trust are removed from your probate estate, so estate expenses may be less
What You Can Contribute
Any type of asset that you irrevocably donate to a charitable organization like MPEF results in a current income tax deduction. But there may be other tax benefits to your contribution, as well. The benefits depend on the nature of the gift.
Giving cash is the simplest method. A gift of cash results in a current income tax deduction.
If you contribute appreciated securities to MPEF, you have the added benefit of owing no tax on the gain. That is, gifts of securities provide relief from capital gains tax.
You can also give tangible personal property (like an art object, prized collection or antiques) and take a deduction for its full fair market value if the gift is related to MPEF’s exempt function.
When you first obtained your life insurance policies, you obviously felt a need for them. But perhaps you don’t need all of that coverage today. Yet you still have those policies. There are a couple of options to explore.
First: If you’re thinking about a contribution to MPEF, a gift of your life insurance could be a sensible as well as generous course of action.
Second: You can also use life insurance to replace the value of a different gift. For example, you could donate stock to MPEF because of the tax advantages and purchase life insurance to benefit your heirs in the amount they would have received had you left them the stock. However, with life insurance you also receive the additional advantages that life insurance bypasses probate and your heirs will receive the proceeds of your life insurance income tax-free.
- Charitable deduction when you name MPEF beneficiary and assign the Foundation ownership
- Flexibility through naming MPEF beneficiary but keeping ownership
- Security for your family by naming MPEF contingent beneficiary
- Reduction in estate taxes because proceeds are removed from your estate.
Retirement Plan Assets
Did you know that your retirement plan assets are facing double taxation? If you leave the assets to your heirs, you’ll generate “income in respect of a decedent.” So not only is the amount diminished by estate taxes, but the recipient also must pay income taxes on it!
If you can make other provisions for your family, there’s a better option for your retirement plan assets — a charitable gift.
To implement your wishes, simply advise the plan administrator of your decision and sign whatever form is required. For an IRA or Keogh plan you administer personally, notify the custodian in writing and keep a copy with your valuable papers.
- Naming MPEF the primary beneficiary avoids all income and estate tax
- Partial savings when you give MPEF a specific amount before giving family the remainder
- Naming MPEF the contingent beneficiary may also allow for greater flexibility in regards to estate taxes
- Donating retirement plan assets could be the most cost-effective gift you can make
Are you thinking of selling land or a building? Beware of capital gains tax! If you sell your primary residence, you can exclude a certain amount of the gain. But this tax break doesn’t apply to other types of real estate, so you may have a better alternative.
A charitable contribution of real estate — whether it’s your personal residence, a vacation home, a farm, commercial real estate or vacation land — will give you numerous advantages.
When you give your home or other real estate to MPEF, you create an enduring testimonial of your interest in the Foundation’s mission. And what’s more, your personal satisfaction is complemented by valuable tax benefits.
- Income tax charitable deduction for the full fair market value
- Avoidance of the tax on the property’s appreciation
- No hassle from trying to sell the property
- No gift tax, plus a reduction of your taxable estate
Retained Life Estate
Let’s assume you like the tax advantages that a charitable gift of real estate would offer, but you want to continue living in your personal residence for your lifetime. Did you realize you can give MPEF your home, even though you continue living there?
It’s true. It’s called retained life estate.
A gift of your home, farm, vacation home or condominium, even with stipulations about occupancy, results in a charitable deduction of your income tax.
The retained life estate may also provide you with a way to let someone other than you or your spouse (perhaps a sibling or child) have life occupancy of your home with reduced tax obligations.
- Lifetime use of the residence for you and/or another person
- Income tax savings through charitable deduction
- Estate tax savings for you and/or another person (if the other person is your spouse)
- Ability to gift only partial interest in property and receive tax advantages
Closely Held Stock
If you own a sizable block of stock in a closely held corporation, you may have a gift option that makes everyone happy.
Suppose you decide to donate some shares (few enough that you retain 50% ownership) to MPEF. And then MPEF presents the stock to your corporation for redemption. Your corporation uses retained earnings for the purchase.
MPEF wins because we receive much-needed funds. But you and your corporation also win.
There’s one caveat: the IRS has ruled that you cannot legally bind a charitable organization to go through with the redemption at the time it receives the shares. But a charitable organization may independently offer the donated stock for redemption.
It’s a favorable option that benefits you and MPEF.
- Income tax deduction for the charitable contribution
- No capital gains tax on the appreciation in value
- Reduction of retained earnings reduces exposure to accumulated earnings tax
- You maintain control of the corporation
Charitable Remainder Annuity Trust
If you’re disappointed in the yield from your current investments in the stock and bond markets, yet you want to avoid the capital gains tax should you sell, try a charitable remainder annuity trust.
This plan will pay you, year after year, the same dollar amount you choose at the outset. The income payments are fixed — based on the starting valuation. Then after your lifetime (and the lifetime of a surviving beneficiary, if desired), the trust remainder is available to support the MPEF mission.
The charitable remainder annuity trust is more than an eventual gift to MPEF. It lets you give away the tree and still keep the fruit, because you receive an increased income from your donation.
- A fixed dollar income paid annually, semiannually or quarterly
- Immediate charitable deduction
- A way to increase income from a low-yield holding
- Freedom from investment management
- Avoidance of capital gains tax on appreciated assets used to fund the trust
Charitable Remainder Unitrust
A charitable remainder unitrust is like a combination of a gift and an investment plan. You place assets in trust and you (and/or another beneficiary) receive lifetime income from them, then MPEF receives the remainder.
With a unitrust, the amount you receive as income is a set percentage of the value of the trust assets, re-determined annually.
You also have the option of choosing one of five variations of unitrusts. A unitrust with a net income plus makeup provision, for example, pays only the actual trust yield, even if it is below the stated percentage. Then in later years, when performance is better, those deficiencies are made up.
This option is excellent for devising a supplemental retirement plan.
- Lifetime income (often greater than your previous yield)
- A sizable income tax charitable deduction
- Avoidance of capital gains tax if you donate appreciated securities
- Professional management of the assets frees you from investment responsibilities
Charitable Lead Trust
Are you concerned about the possibility of the government taking a huge part of the assets you were planning to leave your heirs?
There’s a way to pass assets to your family with significant estate tax savings while at the same time making a gift to MPEF. It’s called a charitable lead trust.
After MPEF receives income from assets in the trust for a period of years, the principal goes to your family, with estate or gift taxes usually reduced or even eliminated.
The lead trust is an exceptional way to transfer property to your children or other heirs at minimal tax cost. It’s ideal if you’re willing to forgo investment income on an asset but don’t want to force your heirs to surrender the principal.
With a lead trust, you carry out your philanthropic plans over the coming years and save on taxes.
- Can be funded during your lifetime or through your will
- You support the MPEF mission through annual income payouts
- Reduces your taxable estate and potential gift taxes
- Assets can be kept in the family
Charitable Gift Annuity
The concept of a gift annuity is simple. You donate assets that MPEF reinvests, which immediately becomes general assets for use by the Foundation. MPEF agrees to pay you fixed payments for life (and, if desired, for another beneficiary’s lifetime).
A charitable gift annuity is particularly attractive because they offer reduced risk and liquidity while still maintaining a competitive income.
And when these aspects are combined with the income being partially tax-free, the effective rate of return is even higher.
- Lifetime payments for yourself and possibly another person
- Charitable deduction for a portion of the value of the gift
- Part of the annual income is considered a tax-free return of capital
- Capital gains tax savings when you contribute appreciated securities
How to Complement Annual Giving
Planned gifts help support the long-term future of MPEF, while annual gifts support current operations. Generally speaking, a planned gift is considered an “ultimate gift,” i.e. over and above regular annual pledging.