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Estate Planning

Financial Donors to Germantown AcademyPlanned Gifts are structured donations, built in consultation with the donor’s advisors, intended to benefit GA and to optimize the donor’s financial, tax and/or estate plan. Many creative and advantageous plans/products exist that can provide maximum benefit for both the donor and for GA.

Perhaps the most common form of a planned gift is a Bequest of assets through ones will designating GA as the beneficiary.




Learn more about Gift Planning and The Samuel E. Osbourn Society

In a Will, There is a Way


Many of our alumni would like to make a significant gift to Germantown Academy but feel their generosity must be considered along with the financial responsibility for themselves and loved ones. Some, however, have discovered that through their wills it is possible to help GA without neglecting other obligations.

The Samuel E. Osbourn Society, GA’s planned giving recognition society, honors one of our school’s most visionary leaders. Osbourn had a keen appreciation for preserving the future of the school and assuring the educational progress for generations of students to come.

Similarly, you can make a direct impact upon our school’s future by planning a gift through your estate for GA. Perhaps the most common gift vehicle is the charitable bequest. By making a bequest provision in your will, you simply direct that certain funds or property be transferred to GA from your estate. Bequests can take various forms.

A general bequest, the most popular type, provides a specific dollar amount. Specific property bequests designate a gift of other types of holdings such as specified stock or real estate. A residuary bequest is used to give a charity all – or a portion of – one’s property after all debts, taxes, expenses and other bequests have been paid. A percentage bequest can be expressed as a percentage of an estate or residuary estate.

The GA Office of Institutional Advancement would be pleased to assist you, by providing sample bequest language and further explanations of other gift vehicles, as you consider this and many gift planning options. Further, your attorney and other advisors can assist you in assuring that your plans fully incorporate your charitable intent to benefit GA. Contact Martin Dean for more information.

Strategic Giving Through Trusts

Over the course of the last year or two, our collective financial landscapes have been altered, sending rippling waves of change felt everywhere from Wall Street to non-profit organizations like Germantown Academy. Surely no one is unaffected by the recent historic variations within our national, and global, economy.

To steady our unease about such unpredictable changes, we can take at least some solace in two proven constants: lessons learned from our national history and the overall institution of education as a whole.

History shows us that, despite the current upheaval, financial markets over time do indeed surge and retreat. All-time lows of the past were inevitably followed by restraint and eventual recovery. Enabling such a recovery is fully reliant upon sound leadership, the kind of leadership that is kindled and nurtured in our nation’s best schools, like Germantown Academy.

So, given the current environment, how can a donor make a gift to GA that would both be practical and wise in this fiscal climate and support the mission of our school in a significant way? There are many gift planning ways to do so. One, for example, is by establishing a Charitable Lead Trust (CLT) funded with depreciated stock.

Example:

  • $200,000 of depreciated stocks (valued at 50% less this year than last) funds a CLT that, for a term of 10 years, pays GA a fixed 5% (or $10,000) per year.
  • After that 10 year term, the trust corpus reverts to the donor’s heirs while a total of $100,000 has been gifted to GA for student financial assistance support
  • As markets head toward recovery over the 10 year term the stocks recover their value from the year prior to establishing the trust and are now valued at $400,000 to pass to heirs
  • $200,000 of that trust value was in stock appreciations over the time of the investment, all of which is passed back to you, or on to the heirs, tax free as appreciation is not subject to capital gains

This example illustrates just one scenario of philanthropic action that can be taken now to help Germantown Academy today and preserve or even grow your assets for tomorrow. To learn more ways to support GA and its mission of educating leaders for a global society, please contact Martin Dean at GA’s Office of Institutional Advancement (267) 405-7458 or EMAIL.

Giving Through Your IRA

IT'S OFFICIAL!

Signed into law by President Obama December 2015 - The IRA Charitable Rollover Provision is now permanent!

You can make an IRA charitable rollover gift to GA if :

  • You are 70 1/2 or older at the time of the distribution.
  • The funds are transferred directly from your IRA account to GA (up to a maximum of $100,000 in the aggregate to all qualified charities, including GA).

Your benefits may include :

  • Funds rolled over directly from your IRA account to GA will not be recognized as gross income for federal tax purposes.
    (NOTE: The funds transferred also will not qualify for a charitable deduction.)
  • You can still enjoy the federal tax benefits regardless of whether you itemize deductions on your federal income tax return. In particular, this helps older Americans who may have paid off their home mortgage and no longer file itemized tax returns. The mandatory distribution from an IRA would otherwise trigger a tax burden. The IRA rollover provision removes these negative tax consequences.
  • If you have not yet taken your required minimum distribution, you can satisfy your required minimum distribution in whole or in part by having the funds transferred directly from your IRA to GA.
  • The funds can be used to satisfy an existing pledge or to make a new gift to GA. (Unfortunately, the law does not permit the funds to be used to establish a charitable gift annuity or other planned gift.)

We encourage you to consult with your tax advisor or accountant if you are contemplating making an IRA charitable rollover gift to Germantown Academy. Please check with your tax advisor or accountant with regard to any state income tax issues.

Please feel free to contact Martin Dean with any questions.

Gift Planning Examples

Bequests

The simplest testamentary gift to the school can be made by will or revocable living trust. This type of gift offers a current estate tax charitable deduction. Because Germantown Academy places funds received from wills and living trusts in permanent endowments, they provide a critical base of reliable support for our programs, enabling us to meet future unforeseen challenges.

An individual may bequeath a particular asset, a dollar amount, or a stated percentage of one's estate or residual estate after other debts and other bequests have been paid. It is also possible to name Germantown Academy as a contingent beneficiary in the event that your named beneficiary is no longer alive at the time of your death.

Charitable Trusts

Gifts can be directed to Germantown Academy through trust agreements, such as a Charitable Remainder Trust (CRT, CRUT or CRAT) which can pay you or a designee life income payments earned from the trust principal and GA would receive that corpus at the trust’s completion. A Charitable Lead Trust (CLT) inversely makes payments from the principal to GA with that total reverting to heirs at the completion of the trust's term.

Charitable Gift Annuity

This is a life income agreement made between the donor and GA in which the donor makes a leadership contribution to GA ($50,000 minimum) which is invested and the donor receives guaranteed annual payments earned from those funds for life.

Life Insurance

Life insurance is an often overlooked vehicle for contributing to Germantown Academy. When you name GA as both owner and beneficiary of a policy, the school gains invaluable financial support, while you receive a substantial charitable deduction. The value of a fully paid policy is its cash surrender value. If the school elects to pay premiums, these payments will be considered operating expenses and will not increase the cash surrender value of the gift.

Retirement Plans

You can name Germantown Academy as a beneficiary of a life insurance policy or retirement plan asset. Contributions of life insurance policies that have a cash value may entitle the donor to a current income tax charitable deduction, in an amount roughly equivalent to the cash surrender value of the policy at the time of the gift. The gift must be irrevocable and designate the school as both owner and beneficiary under the policy. Consult your tax adviser to see if this type of planning makes sense for you and your loved ones.

Retirement plan designations can be a little more complex, but, simply speaking, designating the school as a beneficiary of an individual retirement account or other qualified retirement plan benefits can offer estate tax benefits. This is because amounts in an IRA are includible in the donor’s gross estate (although sometimes offset by certain deductions) and distributions from most IRAs are subject to income tax. Therefore, in a large estate, where a child or grandchild is the designated beneficiary, only a small portion of the IRA may remain after payment of both estate and income taxes. On the other hand, both the school and the family will benefit if the school is the beneficiary of the IRA and the family receives other assets. Again, if you are philanthropically inclined, your tax adviser can best recommend a course of action for you.

Appreciated Securities

Gifts of appreciated securities can be particularly beneficial to both you and Germantown Academy. Long-term securities (those held more than a year) earn a deduction on their fair market value on the day of the gift. In addition, neither the school nor the donor is subject to capital gains tax on those securities. Short-term securities earn a deduction on their original cost to you. Gifts of readily marketable securities will be credited at fair market value at the average of the high and low quoted selling price on the date the donor relinquishes control of the asset. We ask that donors making a gift of stock contact the school before the transfer is made, so that we may credit the donor properly.

Gifts of Real Property

Germantown Academy can benefit from gifts of all types of real property, such as a residence, a vacation home, a farm or commercial property, or undeveloped land. Donation of real property to GA can substantially reduce federal and state income tax liability as well as provide an immediate solution to marketing problems, eliminate carrying costs and remove the property from your gross taxable estate. A gift of property to GA would entitle you to a charitable deduction for the property's fair market value. Your deduction is limited to 30% of your adjusted gross income, with a five-year carry-over for any excess.

Tribute and Memorial Gifts

Honor a special person by making a memorial or tribute gift in his or her name to Germantown Academy. With your gift, you may celebrate birthdays, anniversaries, remembrances, or "just because." Your donation in someone's honor or memory is a wonderful way to express your admiration while making a difference at GA.

For more information about Planned Giving to Germantown Academy, contact Martin Dean at EMAIL or 267.405.7458.

Gift Planning FAQs

What Kind of Gifts Can I Give to Germantown Academy?


Generally speaking, during your lifetime you can make an outright gift of cash, securities or other property (e.g., real estate, personal property). Upon your death you can make a gift through your estate plans or with a distribution from a retirement plan or life insurance policy. You could also plan a gift that returns lifetime income to you, your spouse, or other individuals, such as a charitable remainder unitrust or annuity trust.

What sort of assets can I use to make a gift?

Germantown Academy gratefully accepts various kinds of gifts such as: cash, publicly traded securities, life insurance, or the balance of your retirement account. Other assets can be very valuable but are more complicated to administer and must be reviewed by us before we can accept them as gifts: real estate, closely held stock, artwork and collectibles.

What tax deduction will I receive for my gift?

It depends on the form your gift takes:

  • Gifts of personal property, like art, books and collectibles, are fully deductible so long as they are relevant to our mission. We can advise you on this point.
  • Outright gifts to Germantown Academy generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains -- a great tax benefit!
  • Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax, however.
  • Similarly, life insurance distributions to Germantown Academy are not income-tax deductible, but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see the next Question).
  • The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust is the fair market value of the gift asset minus the present value of the income interest you retain.

Can Germantown Academy serve as the executor of my estate?

No. State law, the limitations of our corporate powers, and our internal policies prevent us from taking such a role in your affairs.

Life Insurance Question

No, you may not set up a life insurance policy, name Germantown Academy as beneficiary, but retain ownership of the policy, nor deduct the premium payments you make.

The IRS would not consider that a "completed gift" – they'd say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. Germantown Academy must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.

Can I transfer my IRA to Germantown Academy to set up a life-income gift, and avoid income tax on the transfer?

Under present law, any lifetime distributions from an IRA are included in your taxable income, even if these funds are transferred to us. You do, however, receive a current charitable deduction when you establish a life income gift, which would partially offset the amount included in your taxable income. Proposed legislation would make the transfer tax-free, however. Watch our Website for updates.

I'd like to donate a painting. Will you determine its value for my income tax deduction?

No, we can't. The IRS requires that donors of artwork and collectibles secure an independent appraisal of the items to establish fair market value. The appraisal has to be related to the gift – an insurance appraisal won't suffice. We can assist you on this point.

If I create a bequest or life-income gift, will Germantown Academy continue to ask me for annual contributions?

We will, because the commitments address two different needs. Your planned gift is a significant addition to our long-term financial strength -- our ability to meet the challenges and opportunities the future will bring. Today's teaching, however, is supported through your annual gift.


“To increase the tuition in order to meet our financial needs is
not the answer, for many families will be priced out of a Germantown Academy education.Some years ago during the Great Depression, a giving fund was organized and an appeal was sent to the alumni for aid. The response was so gratifying that tuitions were not increased and a number of you were able to remain in school to graduation.”

- Dr. Samuel Osbourn, a message to his students on giving back to the Academy (1965)

The Samuel E. Osbourn Society was established in memory of Dr. Samuel E. Osbourn, esteemed headmaster of Germantown Academy, 1915-1948. Osbourn is remembered as a master in the psychology of educating young students, encouraging and developing the best in each of them. The Osbourn Society recognizes those individuals who share Osbourn's commitment to independent school values and his vision for the future of Germantown Academy by making gifts through bequests or other estate plans.

Individuals who inform Germantown Academy of their gift planning intent are invited for membership in The Samuel E. Osbourn Society.


The Samuel E. Osbourn Society

See who's already joined in helping GA. Member list is HERE.

In Their Own Words

Find out why these members felt moved to donate to the Samuel E. Osborne Society HERE.