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. More than that, planned gifts like these reflect your values and your dreams for Punahou’s future.
The School aims to raise $35 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 is a revocable gift to Punahou School through your will or living trust. The reason so many people include charitable gifts in their estate plan is the flexibility of bequests. You can give a specific amount of money or a particular asset, such as stocks or real property, or a percentage of the remainder of your estate after your other bequests, debts and taxes are paid. This enables you to take care of your family first before Punahou receives anything.
In addition to adding bequest language to your will or living trust, a simple way to leave something for Punahou is to designate the school as a beneficiary of a retirement plan, brokerage or bank account, or life insurance policy.
Leave a Particular Asset – 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.”
Leave a Specific Amount – Designate a specific amount to Punahou. Example: “I give $_____ to Punahou.”
Take Care of Your Loved Ones First – After you have provided for your other beneficiaries, consider leaving all or part of the residue of your estate to Punahou. Example: “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.
If you have a traditional individual retirement account (IRA) and are at least 70-1/2 years of age, you can give up to $100,000 per year to your favorite charities without being taxed on the distribution. A qualifying distribution must go directly from your IRA to the charity, and you may receive no goods or services in exchange for your gift. The IRA rollover is a smart way to support Punahou and avoid taxes on your required minimum 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.
Please contact us for more detailed information and a copy of our pamphlet Gifts From Your IRA to Punahou.
A charitable gift annuity (CGA) is a contract between you and Punahou School. When you make an irrevocable gift of cash or securities, Punahou agrees to pay one or two annuitants a fixed sum for life. Your gift entitles you to a partial tax deduction, and a portion of the annuity payments is tax-free, making a CGA a smart way to supplement your income and save taxes. At the end of the annuitant(s)’s lifetime, Punahou receives the remaining value of the CGA to use in accordance with your instructions as agreed by Punahou.
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:
- Make a gift of cash or securities to Punahou. You can create a CGA with Punahou for as little as $10,000.
- You must be at least 65 years of age to establish an immediate payment CGA or 60 years of age to defer annuity payments.
- Your annuity rate is based on the ages of the annuitants. For example, a 75-year-old would receive a payout of 5.8% and an 85-year-old would receive 7.8%. A CGA of $50,000 would then pay the 75-year-old $2,900 per year for life and the 85-year-old $3,900 per year for life. The older you are, the higher your annuity payment will be.
- Receive an income tax charitable deduction at the time of your gift.
- Annuity payments are backed by the assets of Punahou School and guaranteed to continue for life.
- A portion of your annuity payments will be tax-free for gifts of cash.
- Put your low income-producing appreciated assets to work for you.
A charitable remainder trust (CRT) is also an irrevocable gift that pays you income. When you make an irrevocable gift of $100,000 or more to a charitable remainder trust, you are eligible to claim a tax deduction and the trust pays you a percentage of the trust assets for life or a specified term of years. The assets are re-valued every year and have the potential to grow over time, making it an excellent hedge against inflation. Punahou can serve as the trustee of the CRT and its partner BNY Mellon will manage the investment of the trust assets. When the trust terminates, the remainder interest is your gift to Punahou.
- You make an irrevocable gift of cash or appreciated property, such as securities or real property, into a CRT.
- You can establish a CRT with a minimum gift of $100,000 for cash and securities and $250,000 for real property.
- A CRT pays you or beneficiaries you name a minimum of 5% of the trust asset value, re-valued annually.
- Punahou will serve as trustee of your CRT. Alternatively, you or another person you select may serve as trustee.
- If Punahou is the trustee, it will work with BNY Mellon to manage and invest the trust assets and prepare all tax reporting documents for the trust.
- You can also establish a CRT to take effect at your passing with assets from your estate.
- When the trust terminates, the remainder passes to Punahou to support the school’s highest priorities or specific areas that you designate.
- Provide income from the trust assets for you or loved ones for life or a term of years, depending on your circumstances.
- Receive an income tax charitable deduction.
- Pay no capital gains tax at the time of the gift.
- You have the option of making additional gifts to the trust over time.
- Convert your low-yield appreciated assets into higher yield assets and create more diversification.
A charitable lead trust (CLT) uses the assets contributed to the trust to generate annual payments to Punahou for a term of years. At the end of the term, the assets remaining in the trust are returned to individual beneficiaries (typically the donor’s children or grandchildren) without passing through the donor’s estate. The CLT is an excellent way to make a significant gift to Punahou that it can use for immediate funding needs while ultimately distributing the assets to your heirs, giving them full control of the assets.
- You irrevocably transfer cash, securities and/or real property to a trust.
- During the term of the CLT, the trustee (Punahou or someone you appoint as trustee) invests the trust assets.
- Each year, the trustee pays a fixed percentage of the unitrust’s current value, as re-valued annually, to Punahou School. If the CLT’s value goes up or down from one year to the next, its payout to Punahou School will fluctuate proportionately.
- The CLT’s term may be for a specific number of years (10-20 years is common), one or more lifetimes, or a combination of the two. The trustee makes payments to Punahou from trust income, or trust principal if the trust income is not adequate. If trust income exceeds the charitable payment in a given year, the trust pays income tax on the excess.
- When the trust terminates, the remaining assets pass to your family members or other beneficiaries.
- You have the option of making additional gifts to the trust over time.
- You receive a federal gift tax deduction.
- You support Punahou School with annual payments from your trust for a term of years.
- The beneficiaries of your trust (for example, family members) will receive all of the trust's assets when the trust terminates. Any asset growth that occurs within the trust will be distributed to your trust's beneficiaries free of gift or estate tax.
- Your gift will benefit from expert asset management, provided by BNY Mellon.
A retained life estate is a gift plan defined by federal tax law that allows you to donate your home, vacation home or farm to Punahou School while retaining the right to use it for the rest of your life, a term of years, or a combination of the two.
- You make a gift of real property to Punahou and retain the right to live in the property for the rest of your life.
- You continue to be responsible for all routine expenses – maintenance fees, insurance, property taxes, repairs, etc.
- When your retained life estate ends, Punahou School can then use your property or the proceeds from the sale of your property for the purpose you designate.
- You continue to enjoy your property for the rest of your life.
- A retained life estate give you a significant and immediate income tax charitable deduction, and may reduce estate taxes and probate costs while also providing generous support for Punahou School.
- You can terminate your life estate early and receive an additional charitable deduction.
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 in your estate plan. You want to minimize tax consequences to your heirs and maximize your giving to Punahou.
- Designate Punahou as a beneficiary of your retirement assets, such as your individual retirement account (IRA), 401(k), 403 (b), or other qualified plan and leave your appreciated assets, such as securities and real property, to your heirs.
- 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. Because Punahou is a tax-exempt organization, it will benefit from the full value of your gift.
- You can continue to take distributions from your retirement accounts during your lifetime.
- You can change your beneficiary designation at any time.
- Your family avoids additional income tax and your estate enjoys estate tax savings if you have a taxable estate.
Donating appreciated securities, including stocks or bonds, is an easy and tax-effective way for you to make a gift to Punahou School. Use these assets whenever possible to fund a life income gift like a charitable gift annuity or charitable remainder trust to maximize your tax benefit.
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 immediate 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 for either a charitable remainder trust or as an outright gift.
- You give your real property to Punahou School by executing or signing a deed transferring ownership.
- You may deed part or all of your real property to Punahou School.
- The charitable deduction and value of your gift is based on the property's fair market value, which must be established by an independent appraisal.
- Avoid paying tax on any gain from the sale of real estate.
- Receive a charitable income tax deduction based on the value of the gift.
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. BNY Mellon’s accolades include:
- Named “Top U.S. Private Bank” by Family Wealth Report in 2016
- Ranked the 8th Largest U.S. Wealth Manager by Barron’s in 2016
- Named “Best Private Bank in North America” by Global Finance magazine in 2015
- Named “World’s Best Global Custody Bank” in 2014
- Named “World’s Safest Bank” in 2014
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.