2000-2001 Annual Report

edarville University experienced a record level of charitable trust giving in 2001. Here are two real-life examples of individuals who established Cedarville University charitable trusts in the past year. Mr. and Mrs. K had owned and operated a farm in central Illinois for more than 35 years. Through God’s blessing and their hard work, the farm was debt-free. When it was time to leave the farm, they had four goals: continue to honor the Lord with their giving by making a significant gift to Cedarville University, reduce or eliminate estate taxes, provide for the cost of assisted living, and create an income supplement for their heirs. If they had sold their farm outright and reinvested the sale proceeds net of capital gains taxes, the annual investment income would not have provided adequate assisted living care for the remainder of their lifetime. Instead they placed their farm in a Cedarville University charitable remainder trust. The farm was sold by the trust, exempt from capital gains tax. The gross proceeds were reinvested and now earn more than enough income to pay for assisted living plus anticipated cost increases. The income tax deduction earned by placing the farm into the charitable remainder trust will offset a percentage of the taxable trust income for up to six years. When Mr. and Mrs. K have both gone to heaven, a portion of the trust income will be given to their heirs for a period of 20 years. After that, the remaining trust assets will be given to Cedarville University. Mr. K remarked, “The charitable remainder unitrust was the correct answer for all of our needs. Cedarville University handled the entire transaction for us. I hope more people will learn about the advantages of this giving arrangement.” Mr. and Mrs. C owned and leased three condominiums in the suburbs of Cleveland for more than 20 years. These properties were also debt-free and the tax basis was minimal. Mr. and Mrs. C had reached a stage of their lives when the income from the lease properties was not sufficient compensation for the management time and effort required. They also were concerned about the properties remaining in their estate since they did not want to pass along the management responsibilities and challenges to their heirs. However, they were hesitant to sell the properties because the net proceeds would have been reduced by significant tax liabilities. Mrs. C, a Cedarville alumnae, appreciated the education she received at Cedarville. Both wanted to perpetuate the ministry of Cedarville and decided to include the University in their stewardship plans. A charitable remainder trust created the gift and gave them relief from capital gains tax. A single unitrust can receive multiple gifts at varying times. A unitrust can be effectively funded with cash, cash equivalents, and appreciated property. Mr. and Mrs. C used a “balanced sale” approach, selling the first condominium for cash and placing the second in the unitrust. The sale of the first condominium created capital gain. However, they were able to create sufficient tax deduction to offset the capital gains tax by placing the second condominium into the unitrust along with a portion of the cash sale proceeds from the first. They were then able to use the remaining cash from the sale for other purposes. Finally, they decided to delay the transfer of the third condominium into the unitrust for one year until their lease commitment to the current tenants was satisfied. In this way, Mr. and Mrs. C were able to convert three separate properties into life income gifts on a schedule that fit their needs. Mr. C stated that the charitable remainder trust “did double duty by saving us and our children a lot of management headaches and creating real joy in supporting Cedarville and other ministries. It also freed up our time to do the things we enjoy, like spending the winter in Florida and visiting missionaries in the foreign field.” Deferred gift plans, such as gift annuities and charitable remainder trusts, allow you to make meaningful gifts to Cedarville while creating supplemental income and significant tax savings for yourself. These exciting plans can also enhance your family’s quality of life, both now and in years to come. For more information about deferred giving plans, please e-mail giftplanning@cedarville.edu , call either Dave Bartlett or Kim Longo at 1-800-766-1115, or visit our Web site at www.cedarville.edu/services/fpcreateincome. Honoring Cedarville University through Deferred Giving C 12