Accumulations in qualified retirement plans such as 401(k)s, IRAs and Keoghs can cause the value of many estates to rise above threshold values established by Congress, thus incurring federal, and possibly state, estate taxes. Careful planning can minimize the taxes due on retirement plan assets. One option is to designate a percentage of assets from the plan to Brewster Because such a gift is for charitable purposes, it is fully deductible from the estate, and can often result in more assets being received by heirs.

New Philanthropic Opportunities: IPOs, Options, and Restricted Stock

The sale of a company, a merger or acquisition, an initial public offering, or compensation benefits may create a new philanthropic opportunity. Transfer of such assets may allow you to accomplish your financial goals while also achieving your charitable objectives for Brewster.

Ways to Receive Income from a Gift to Brewster

If you want to make a charitable gift to Brewster, but need to retain income for yourself or a family member, consider a deferred, or "life income," gift. Deferred gifts can allow you to achieve your philanthropic goals for the School, while also providing income and important tax savings.

Charitable Gift Annuity

You can make a contribution to Brewster and receive a fixed annual income from the gift for the rest of your life. The rate you receive is based on your age and will increase as you get older. If you give appreciated securities to create an annuity, the capital gain is prorated over your life expectancy; part of the annuity payment is tax-free for the duration of your life expectancy; and you receive an income tax deduction, the amount of which varies, depending on the age of the annuitant. Upon the death of the annuitant (you or your designee), the remaining principal becomes available to the School.

Charitable Remainder Trust

A charitable remainder trust can be established with cash, appreciated securities, real estate, or other marketable assets.  Managed by a trustee (usually Brewster Academy), a charitable remainder trust provides income until your death (or the death of a beneficiary), or for a specified term of years. When the trust expires, the principal becomes available to the School.

Donors may choose the trust's annual payout rate. A Unitrust pays income according to a fixed percentage of the total trust value, as revalued each year. As a unitrust's value increases, payments to the beneficiary also increase. An Annuity Trust pays a fixed dollar amount each year, rather than a percentage of the annual trust value. This dollar amount is established when the annuity trust is created, and it does not change from year to year.

Charitable Lead Trusts

A charitable lead trust is the reverse of a charitable remainder trust. Instead of generating income to the donor, a charitable lead trust pays a fixed percentage of the trust assets to Brewster Academy for a specified term of years. When the trust expires, the principal is returned to the donor or a designated beneficiary.

With this vehicle, you are able to remove a significant asset from your estate, thereby reducing the potential gift or estate tax. The longer the period of years and the higher the pay-out rate, the greater the tax savings. The assets placed in the trust are expected to appreciate over time, but that appreciation is not subject to further gift or estate tax when the trust terminates. This vehicle allows you to make a significant gift to Brewster, while also preserving assets for your heirs.

Gifts of Real Estate

Most real estate has appreciated at a rate higher than inflation, making it an ideal asset for many methods of charitable giving. A home, undeveloped lot, commercial property, or other real estate can be contributed outright, converted to a new source of income through a deferred gift agreement, or transferred directly to the School with arrangements for life tenancy. Depending on the giving method, you can benefit from income tax savings, capital gains tax savings, or estate and gift tax savings, while also possibly increasing your annual income. A comprehensive written appraisal by a qualified, independent appraiser, arranged and paid for by the donor, is required for all gifts of real estate for income tax deduction purposes.

Gifts of a Personal Residence or Farm with Life Tenancy

It is possible to transfer ownership of a residence or farm to Brewster while retaining use of the property during your lifetime, as well as your spouse's lifetime. The property is not required to be your primary residence; it can be a second or a seasonal home. Donors with life tenancy remain responsible for insurance, maintenance, and taxes.

This is an excellent way to support Brewster Academy, while also receiving a current income tax deduction. The deduction is less than the full appraised value of the property and is based largely on the life expectancies of the donors, the estimated useful life of the property, and the separate values of the land and buildings.

Gifts of Personal Tangible Property

Gifts of personal tangible property, such as art or antiques, are accepted by Brewster if they can be used in support of the mission of the school. Some examples of property that has been donated to the School include: paintings, antique furniture and boats.  If you have owned the property for more than 12 months, you may claim an income tax deduction for its fair market value, even though the original cost may have been a fraction of its current value. A qualified appraisal, arranged and paid for by the donor, is required for income tax deduction purposes for gifts of $5,000 or more.

As with real estate, in certain cases a gift of personal tangible property may be used to create a life income arrangement, such as a charitable remainder unitrust. In such situations, the property is donated to Brewster, and proceeds from the sale of the property are used to create the planned gift.

Gifts-In-Kind

Brewster Academy accepts gifts-in-kind if they can be used in support of the mission of the school. In most cases, these gifts take the form of inventory given through businesses owned by parents, alumni and friends. Gifts-in-kind are also sometimes directed to Brewster by donors whose employers offer corporate giving programs.

Gifts of Life Insurance

You can name Brewster Academy the beneficiary (or co-beneficiary) on an existing life insurance policy. In the event of your death, Brewster receives the proceeds of the policy as a bequest, generating federal estate tax benefits.

If you also make Brewster the owner of the policy and relinquish all incidents of ownership, you can claim an income tax deduction for the cash surrender value. You can also purchase, through annual gifts, a new policy naming Brewster beneficiary and owner. Not only will you be able to transform an annual gift into a large one, you can claim the amount of the annual premium as a charitable deduction for income tax purposes.

Bequests or Other Testamentary Gifts

You can provide for Brewster in your will or in a trust. The full value of a bequest is deductible for federal estate tax purposes, and there is no limit to the size of a bequest. You may also establish a charitable remainder trust or a charitable lead trust through your will, allowing you reduced estate taxes while providing for your heirs and for Brewster.

Gift Purposes and Credit

You can use one or more of the gift arrangements described here to establish a gift at Brewster Academy in support of a program or activity that has special meaning for you. Such gifts may include endowed scholarship funds, distinguished teaching chairs, and gifts to support campus building projects.

To discuss planned giving, please contact Martha J. Trepanier '83 at (603) 569-7135.