A thoughtful gift and estate plan can help satisfy personal financial-planning needs and allow you to maintain control of your assets, while providing Punahou with important long-term support. Life income gifts provide income for you today and support for Punahou tomorrow.
The School aims to raise $30 million of the total $175 million goal, across its various priorities, in the form of planned gifts.
- IRA Rollover
- Charitable Gift Annuity
- Charitable Remainder Trust
- Charitable Lead Trust
- Retained Life Estate
A charitable bequest made in your will or trust, directing a gift to Punahou School, is one of the easiest ways you can make a lasting impact.
You would like to support Punahou without reducing your assets or affecting your cash flow during your lifetime.
You can leave assets to Punahou and other charities when you pass away, through your estate.
- Retain Control
You retain ownership and use of your assets to meet your family’s needs during your lifetime.
Bequests can be modified if necessary.
- Support Punahou
You can direct your bequest to provide unrestricted support for Punahou or designate it to support the priorities most important to you, such as financial aid or faculty support. By doing this, you ensure your legacy lives on.
You can leave a gift to Punahou by including a bequest in your will or trust. Property that passes through a beneficiary designation (such as life insurance policies and retirement accounts) may be donated by designating Punahou as a beneficiary.
Specific Asset Bequests – Make a bequest of a specific asset, such as cash, securities, or other property to Punahou. Example: “I give (all or X percent) of my house to Punahou.”
Specific Amount – Designate a specific amount to Punahou. Example: “I give $_____ to Punahou.”
Bequest a Portion of Your Residuary Estate – After you have provided for your other beneficiaries, consider leaving all or part of the residue of your estate to Punahou. “I give 50 percent of the residue of my estate to Punahou.”
Contingent Beneficiary of Your Estate – Name Punahou as a contingent beneficiary of your estate in the event your other heirs or beneficiaries do not survive you.
The IRA charitable rollover is a great alternative to taking the required minimum distribution (RMD). While you still must withdraw a certain amount of money from your IRA, the IRA charitable rollover gives you a way to satisfy the RMD rules, avoid tax on the distribution and support Punahou School.
- Avoid taxes on transfers of up to $100,000 (up to $200,000 for married couples) from your IRA to Punahou School
- Satisfy your required minimum distribution (RMD) for the year
- Reduce your taxable income, even if you do not itemize deductions
- Make a gift that is not subject to the 50% deduction limits on charitable gifts
How It works
- IRA account holder must be at least age 70-1/2 at the time the distribution is made to the charity
- Distribution must be made directly from the IRA custodian to the charity
- Combined total gift cannot exceed $100,000 per donor per year
- Goods or services cannot be received by the donor in exchange for the IRA gift
Fred has saved all his life and now his IRA has grown quite large. Since he is older than age 70½, the government requires him to make withdrawals from his IRA each year. Fred loves Punahou but worries he must limit his giving because of the taxes he must pay on his RMD. He is unsure if he will have enough left over for Punahou. Here is how the IRA rollover benefits Fred.
|Taxable IRA Withdrawal||Non-Taxable IRA Rollover|
|Fred withdraws his $45,000 RMD.||Fred contacts his IRA administrators and directs them to distribute $45,000 to Punahou.|
|Fred pays income tax on the $45,000 based on his tax rate.||The distribution provides support for initiatives like financial aid, new learning environments or key academic programs at Punahou.|
|He gives Punahou less than he wants because he has to pay so much in taxes this year.||Fred gives Punahou more than he thought he would be able to because he doesn’t have to pay tax on the distribution.|
What If I Have a 401(k) or Other Retirement Account?
The rollover law applies only to IRAs. If you have a 401(k) or other retirement account that requires minimum distributions, you cannot make an IRA rollover gift. However, if the idea of using the charitable rollover appeals to you, it is often possible to roll over funds from your other accounts into your IRA and then make a rollover gift. Please talk with your advisor about whether this option makes sense for you.
If, after talking with your professional advisor, you decide to make a charitable gift from your IRA, please contact us for a sample letter of instruction to your IRA custodian. Your IRA gift can support Punahou School generally or the particular area or program most important to you. We would be happy to assist you and answer any questions you might have.
An agreement through which you make an irrevocable gift of cash or stock to the School and Punahou agrees to pay you fixed payments for the rest of your life.
You would like to make a gift to Punahou and are looking for dependable income for life.
You and Punahou School enter into a charitable gift annuity agreement.
- Fixed Payments for Life
You receive a secure, predictable fixed income for the rest of your life (or the lives of you and your loved one).
- Tax-Free Payments
A portion of your annuity payments may be tax-free.
- Favorable reporting of capital gain
Pay no capital gains tax at the time of the gift.
- Tax Deduction
You receive an immediate income tax deduction for a portion of your gift.
- Support Punahou
Punahou receives the remaining principal when the contract ends.
Make a gift of cash or securities to Punahou and Punahou pays you – or one or two individuals that you name – fixed annuity payments for life:
Duration – Your annuity payments are backed by the assets of Punahou School, and will continue for life.
Payout Rate – Your Gift Annuity payout rate is based on your age. Check with Punahou’s Office of Gift Planning to see how high your payments could be.
Taxation of Payments – A portion of your gift annuity payments could be tax-free. The remaining amount of each payment is taxable at ordinary income tax rates and some portion could be taxed at capital gains rates.
Timing – A Gift Annuity contract can begin making payments immediately (a current CGA) or you can begin receiving payments at a future date (a deferred CGA). A deferred CGA can supplement your retirement income and provide larger annuity payments than a current CGA.
Make an irrevocable gift of cash, securities or other appreciated property to a trust and receive a fixed percentage of the trust value, re-valued annually.
You have appreciated property that produces little or no income, and you would like a more productive asset but are concerned about the capital gains tax if you sell your property.
You contribute the appreciated property to a Charitable Remainder Trust (CRT) and designate Punahou to receive the remainder. The Trustee sells the property and beneficiaries receive income for their lifetimes or for a specified term of years.
- Increased Income
The trust pays an income stream from the trust assets to you or loved ones.
- Bypass Gain
The trust sells your property tax-free and invests the full value of your property. You pay no immediate capital gains tax on the transfer of appreciated assets.
- Tax Deduction
You receive an immediate income tax deduction for a portion of your contribution to the CRT. You can make additional gifts to the trust and qualify for additional tax credits.
- Support Punahou
Punahou receives the remainder interest in the trust upon your passing or at the end of a term of years.
You transfer cash or appreciated property to the CRT:
Trustee – A trustee separately manages and invests the property for the trust. You, another person, a professional fiduciary or Punahou may serve as trustee.
Duration – A CRT can last for the lifetime of one or more beneficiaries or for a specified term of years. It can even be established upon your passing with a bequest from your estate to benefit a loved one before distributing your ultimate gift to Punahou.
Annuity vs. Trust Payout – A Charitable Remainder Annuity Trust (CRAT) pays a fixed dollar amount each year. By contrast, a Charitable Remainder Trust (CRT) pays an amount equal to a percentage of the trust value at the beginning of each year.
Transfer your property to fund a Charitable Lead Trust. The Trust pays fixed income to Punahou for a period of time. At the end of the term, the property will go to you or your family with substantial tax savings.
You want to leave as much as you can to your family by minimizing or eliminating taxes on the gift to them.
You transfer appreciated assets to a Charitable Lead Trust (CLT) and make a significant gift to Punahou now that reduces the taxes due on transfers to your heirs later.
- Tax Savings
The present value of the income payments to Punahou reduces your gift/estate tax.
- Retain Control
You select the appropriate term of years for the CLT, enabling you to schedule when the principal will pass to your family.
- Benefit Your Family
All appreciation that takes place in the Trust goes tax-free to your heirs.
- Support Punahou
Punahou receives a stream of income for a period of time and you are able to see your gift in action during your lifetime.
You transfer cash, securities, and/or real property to a trust:
Payments to Punahou – Every year for a set number of years (or for your lifetime) Punahou receives either a fixed dollar amount or a fixed percentage of the trust asset value.
Remainder to Family – Upon trust termination the remaining assets pass to your family members or other loved ones at a reduced transfer tax value.
Tax-free Appreciation – The appreciation in trust asset value occurs outside of your estate and is thus transferred to your beneficiaries free of gift tax.
Make a gift of real estate to Punahou, retain the right to live on the property and receive an immediate charitable tax deduction.
You want to leave your residence or vacation home to Punahou at death, but need a current tax benefit.
Deed your home to Punahou, subject to a retained life estate.
- Tax Deduction
Receive an immediate charitable tax deduction based on the fair market value of the property, less the value of your life estate. If you terminate your life estate early, you can receive a second tax deduction.
- Preserves Lifetime Use
Continue to enjoy your property for the rest of your life.
- Support Punahou
When you retain a life estate, the gifted property is no longer part of your taxable estate and immediately passes to Punahou when the life estate is terminated.
You execute a deed transferring your home to Punahou. On the deed, you retain a “life estate” that grants you the right to use the property for life. You receive an income tax charitable deduction in the year of the transfer:
Duration – The Life Estate typically lasts for your lifetime or the life of you and another person.
MIT Agreement – You agree to be responsible for the maintenance, insurance and taxes (MIT) for as long as you live on the property.
Remainder Interest – When the life estate ends, Punahou sells the property and uses the proceeds to support the School’s highest priorities or your designated purpose.
What can I give other than cash savings?
You have retirement assets and other appreciated assets that you want to give to your family and Punahou. You want to minimize tax consequences to your heirs and maximize your giving to Punahou.
Designate Punahou as a beneficiary of your high-tax retirement assets and give your appreciated assets to your heirs.
- Retain Control
You can continue to take distributions from your retirement accounts during your lifetime.
You can change your beneficiary designation at any time.
- Tax Savings
Your family avoids additional income tax and your estate enjoys estate tax savings if you have a taxable estate.
You designate Punahou as the beneficiary of your IRA, 401(k), 403(b) or other qualified plan:
Leaving Your Retirement Assets to Punahou
When individual recipients withdraw funds from a retirement account, they must pay income tax on the distribution. Thus, the gift of retirement assets to your heirs may be reduced significantly by taxes. Punahou, as a tax-exempt organization, will not owe taxes when it receives your retirement assets, so the School will benefit from the full value of your gift.
Leaving Your Retirement Assets for Income
Another option is to leave your retirement assets to a trust that pays income to a loved one after you are gone. You can designate the trustee of a charitable remainder trust as the beneficiary of your retirement assets. Please contact the Office of Gift Planning to view an illustration with the benefits of this plan.
Donating appreciated securities, including stocks or bonds, is an easy and tax-effective way for you to make a gift to Punahou School.
There are special rules for valuing a gift of stock. The value of a charitable gift of stock is determined by taking the mean between the high and low stock price on the date of the gift. Mutual fund shares are valued using the closing price for the fund on the date of the gift.
- Avoid paying capital gains tax on the sale of appreciated stock
- Receive a charitable income tax deduction
Donating appreciated real estate, such as a home, vacation property, undeveloped land, farmland, ranch or commercial property can make a great gift to Punahou School.
- Avoid paying capital gains tax on the sale of the real estate
- Receive a charitable income tax deduction based on the value of the gift
Your real property may be given to Punahou School by executing or signing a deed transferring ownership. You may deed part or all of your real property to Punahou School. Your gift will generally be based on the property's fair market value, which must be established by an independent appraisal.
Punahou School utilizes the charitable gift services of BNY Mellon Wealth Management to manage and invest its planned giving assets. BNY Mellon is a global financial services company with $28.5 trillion in assets under custody and administration and $1.6 trillion in assets under management. In 2014, BNY Mellon was named “World’s Best Global Custody Bank,” “World’s Safest Bank” and “Top U.S. Private Bank.” With 80 percent of the Fortune 500 as its clients, BNY Mellon is an excellent partner for Punahou.
BNY Mellon’s Planned Giving Group is dedicated to the investment of Punahou’s planned giving assets, employing socially responsible investment solutions and strategic asset allocation to address Punahou’s long-term institutional goals as well as the current income needs of its donors.
Disclaimer: Punahou School cannot render legal, accounting or other professional service or advice.