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Charitable Remainder Trust Offers Many Benefits and Options

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Attorney and Ball State benefactor J. Richard Emens wanted options.

Seeking a way to supplement his family scholarship, the Emens Scholars program, he also wanted to create a safety net for himself and his wife, Beatrice, for their retirement years. A charitable remainder trust was the answer.

A charitable remainder trust is a custom-designed and individually managed trust that enables you to retain an income for your lifetime or a fixed term of years, claim a current income tax deduction, and make a future gift to Ball State.

Emens, a partner with Emens & Wolper Law Firm, Columbus, Ohio, says he was attracted to the numerous benefits this planned gift offers and the ease in setting up the gift agreement through the Ball State University Foundation. He has elected to contribute the annual income normally received by the beneficiaries back into the trust to increase the fund and generate a greater ultimate remainder for the Emens Scholars program after he and his wife pass.

"Adding funds to the trust, which will eventually go to the scholarship, is my way of paying tribute to my parents who contributed 46 combined years of service to the university," says Emens, who is chairman of the Ball State University Foundation Board of Directors.

Emens' father, John Emens, served as president of Ball State from 1945 to 1968, a period when the campus grew phenomenally and the institution's name was appropriately changed from Ball State Teachers College to Ball State University. The Emens Scholars program recognizes outstanding student leaders and encourages recipients to continue to develop their leadership skills at Ball State.

With retirement on the horizon, Emens said he likes the flexibility a charitable remainder trust offers. "Our charitable remainder trust provides a way to give back - with options," he says. "We can reinvest the income to increase the principal or we can choose to keep it. When we retire, the income will be there if we need it."

Charitable Remainder Trust - Benefits for You
You may want to make a significant gift to the Ball State but not give up the income that cash, securities, real property, or other assets produce. A charitable remainder trust is a life income arrangement that can solve this problem and provide the following benefits:

  • Lifetime (or a term of years) income for you and/or loved ones designated by you.
  • Income will increase as the market value of your trust principal may increase in future years, acting as a hedge against inflation.
  • Professional investment management at low cost if the Ball State University Foundation Foundation is named trustee.
  • Personalized investment portfolio.
  • Current income tax charitable deduction for a significant portion of your gift.
  • Avoidance of capital gains tax.
  • Reduction of estate and gift taxes.
  • Provide unrestricted support to the university, assist your favorite program, or establish a scholarship or perpetual fund with grants or the remainder of your charitable remainder trust.
  • Memorialize your achievements or values with a permanent endowment fund with the trust's remainder.
  • Recognize loved ones or mentors by naming a perpetual fund in their honor with the trust's remainder.

How it works:
Establishing a charitable remainder trust is easily accomplished by:

  • Contacting foundation staff for an illustration of how the trust works as well as the available income payments and all potential tax benefits.
  • Your counsel creates a trust document that is drafted according to IRS rules. Foundation staff can provide sample trust documents.
  • The foundation may serve as trustee at reduced cost.
  • You donate cash, stocks, real estate, or other assets directly to the trust.
  • Payments (5 percent or more of the value of the trust) are made to one or more beneficiaries for life, or for a term of years, or both. Income payments are taxed.
  • A separate agreement with the foundation is executed to define the eventual use of the remainder of your trust. Please contact the foundation staff for a sample agreement.
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A charitable bequest is one or two sentences in your will or living trust that leave to Ball State University Foundation a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Ball State University Foundation, a nonprofit corporation currently located at 2800 W. Bethel Avenue, Muncie, IN 47304, or its successor thereto, ______________* [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to the foundation or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to the foundation as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to the foundation as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and the foundation where you agree to make a gift to the foundation and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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