Planned Gifts

Planned giving is a unique philanthropic tool that allows you to promote New York University's continued excellence while also fulfilling your own financial objectives.

The University's Office of Planned Giving welcomes the opportunity to work with you and your advisors in planning your gift. We can provide sample language for your review in establishing your gift, as well as calculations and illustrations of the tax and income benefits you may enjoy from your gift. If you have provided for the University in your will or trust, you are eligible for membership in The Society of the Torch, and will receive, in addition to other benefits, the Torchlight newsletter, an informative newsletter about planned giving.

For more information about planned giving, or to notify NYU of a planned gift that you have already arranged, please contact:

Alan Shapiro, Esq.
Director of Gift Planning
25 West Fourth Street, Fourth Floor
New York, New York 10012
telephone: (212) 998-6960
fax: (212) 995-4020
e-mail:alan.shapiro@nyu.edu

The following is information on a variety of common ways to structure a planned gift that will have a positive impact on both you and New York University.

Gifts Through a Will or Living Trust
Your bequest to the University or any of its schools or colleges through your will or living trust can take any of a number of forms. You can bequeath a specific dollar amount, or a portion of what remains after your obligations to others are fulfilled. You can designate your bequest to support the University as a whole, or a specific college or school. Through your bequest you can establish a permanent named fund for scholarships, program support, professorships, or the like. Learn more about naming opportunities.

A bequest or gift through a living trust yields estate tax advantages while perpetuating your annual support for the University. You can include NYU in your will or living trust by using the following language: "I give, devise and bequeath [assets/% share of the residue of my estate] to New York University, a New York education corporation with its principal office at 70 Washington Square South, New York, New York 10012."

Please contact us for additional draft language to ensure that the University and its schools and colleges will fulfill your wishes as you intend. We can also provide information about estate planning and the benefits of naming the University in your will.

Gifts of Retirement Plan Assets
By naming NYU as survivor beneficiary of your qualified retirement plan, you can greatly reduce your estate's overall tax burden and increase the amount passing to your children or heirs. Because retirement plan assets are subject to multiple layers of taxation at the owner's death, in the form of federal and state estate tax as well as income tax, retirement assets are taxed much more heavily than other estate assets. If left to a non-spouse, taxes can claim in excess of 75 % of a plan's accumulations.

However, careful planning for the disposition of retirement plan assets will avoid unnecessary tax costs. By naming a qualifying charity such as NYU as survivor beneficiary of your retirement assets, the gift becomes completely exempt from estate tax, income tax, and generation-skipping transfer tax, permitting you to make your gift at very low actual cost to your heirs. If you intend to leave a legacy to NYU or another qualified charity through your will, prudent planning might call for you to make your gift from retirement plan assets instead, leaving the lesser-taxed assets to your family.

For example, George, a widower, is planning his estate. He intends to bequeath $400,000 to NYU through his will. His daughter is named as survivor beneficiary of his IRA, which contains $400,000. George's gift to NYU will result in no estate or income taxes. The IRA will pass to his daughter without estate taxes because it falls within the estate unified credit amount, but it will be subject to income tax when the daughter receives it.

At a combined federal and state income tax rate of 35 %, the daughter will receive only $260,000 from the IRA. However, if George rearranges his estate to bequeath $400,000 to his daughter through his will, and name NYU as survivor beneficiary of his IRA, then George's gift to both NYU and his daughter will be free of all estate and income taxes. This tax-wise arrangement saves $140,000 in taxes for the benefit of George's daughter. This demonstrates the critical importance of thinking about the survivorship designations of your retirement plans in light of your overall estate planning.

Gifts That Pay Income
There are a number of ways for you to make a gift to the University that will pay income. Such a gift will pay benefits back to you, either for your entire life or for a specified number of years, after which the University will use the remaining gift assets for the purpose you specify.

A life-income gift may be worthwhile if you want to make a gift but need to retain or increase the income you receive from your assets. It can be especially attractive if you own low-yielding but highly appreciated securities, and want to increase your income while avoiding capital gains taxes. And you also obtain a substantial income tax charitable deduction when you make your gift.

The various types of life-income gifts that are available permit you to fashion a gift arrangement that best fits your financial needs. You can structure your life-income gift to pay income to yourself and another person or persons. Your gift can pay a fixed or variable income; it may include tax-free income in whole or part; and you can arrange for the income payments to commence immediately or at a future date, such as the date of your planned retirement.

A charitable life-income plan can also maximize your family's income from the survivors' benefits of your qualified retirement plan. You can designate a charitable life-income plan as survivor beneficiary of your retirement plan. When the retirement assets pass into the life-income arrangement, the income tax is avoided and the estate tax is substantially reduced or eliminated. This combination of tax savings gives the charitable life-income arrangement a larger fund available for investment than if you directly designate your heirs as survivor beneficiaries of your retirement plan, resulting in much higher income for your heirs. Read some examples below.

Charitable gift annuity:
Mary, an alumna 80 years of age, wants to support the University but needs the income from her assets. She contributes $10,000 and receives a guaranteed income from the University at a rate of 7.1 % for the rest of her life. She will receive annual income of $710, of which $524 is tax-free. When she makes her gift, she obtains an income tax deduction of over $5,075.

Charitable remainder trust:
Walter and Amy, ages 77 and 74, want to increase their income from their stock holdings. They own stock worth $250,000, with a cost basis of $100,000. If they sell the stock outright and reinvest the proceeds, they would lose a substantial portion of their investment to capital gains taxes. However, when they transfer the stock to an NYU life-income trust, they avoid capital gains tax and have the entire value of their asset working to earn income for them. They select an income rate of 7 %, increasing their annual income from $5,000 to $17,500. They also receive an income tax deduction of approximately $100,000.

Deferred gift annuity:
Lois, age 50, wants to save more for retirement, but she has already contributed the maximum amount for the year to her employer's qualified retirement plan. She contributes $10,000 to NYU's deferred gift annuity, directing that NYU begin the income payments when she turns 70. NYU will pay Lois a guaranteed fixed annuity of $1,300, for a rate of return of 13%. In addition, Lois obtains an income tax charitable deduction of about $4,320 this year. With this gift, Lois increases her future retirement income. There is no limit on the amount Lois can contribute to this plan each year, and she can designate when the income payments will commence.

Gifts That Pass Assets to Heirs
A lead trust allows you to make a gift to the University that ultimately benefits your family and heirs with little or no tax penalty. The lead trust is designed to pay income to the University over a number of years. At the end of the trust term the remaining principal, including appreciation, passes to your children or to other designated heirs. Because the lead trust generates substantial estate tax savings, your heirs can receive a greater inheritance than if you gave or bequeathed the assets to them directly.

For example, Annette is aware that current tax laws will substantially diminish the value of her children's inheritance. She transfers $250,000 to an NYU lead trust, instructing the trust to pay 5 % each year to NYU for a period of twelve years. The assets are invested to earn a 10 % annual total return. Over the trust term, NYU will receive a total of $150,000. After twelve years, Annette's children will receive $460,000 from the trust. If Annette had held the assets instead in the same investment, her heirs would receive less than $295,000, based on the current highest federal income and estate tax rates.

A similar type of lead trust can be designed to return the remaining trust assets to you. This type of lead trust generates a substantial income tax charitable deduction for the donor in the year the trust is established. The deduction is based on the income that the trust will pay to the University in future years. This type of trust can be especially helpful in tax planning when the donor desires a large tax deduction to offset an unusually high taxable income in one year.

Gifts of Real Estate
Real estate can be contributed outright or through a life-income gift. You can contribute your entire property or a fractional interest of it. You can even contribute your personal residence but continue to reside there for the rest of your life. A gift of a future interest in your home lets you continue to enjoy your home while obtaining a substantial current income tax charitable deduction.

For example, Steven and Ruth, ages 73 and 68, own a home valued at $300,000. They make a gift of the home to NYU, while retaining the right to live there for the rest of their lives. While sustaining no change in their accustomed life-style, they increase their cash flow, because the charitable gift of a future interest yields an immediate income tax charitable deduction of about $112,000.

Gifts of Life Insurance
When properly arranged, life insurance offers an attractive way to leverage relatively low premium payments to make a major gift to the University. If you no longer need all the life insurance that you own, you may want to name the University as a beneficiary or contingent beneficiary. Any benefit the University receives from your insurance will be excluded from your taxable estate.

By taking the additional step of naming the University as irrevocable beneficiary and owner of your life insurance policy, you obtain an income tax charitable deduction equivalent to either the policy's cash surrender value or replacement value. If additional premium payments are due, you can deduct those premiums as charitable contributions each year.

Gifts of Artwork and Other Items
You can make a gift to NYU in the form of tangible personal property - artwork, antiques, books, furniture, and the like. Your tax deduction will depend on the type of item you contribute and whether the University will have an appropriate use for it.