A gift in your will

How to meet your charitable goals

Why make a gift in your will?

A popular way of providing long-term support for a meaningful charitable organization is to make a gift in a will. There are a number of reasons individuals might choose this gift option:

  • To make a statement about personal values.
  • To support an important cause and benefit future generations.
  • To honor a loved one or provide a gift that inspires others to give.

Tax planning can also be an important factor in this decision. With some foresight, you can make a gift in your will that fulfills specific planning goals as an integral part of an estate plan.

The benefits of planning a gift in your will

If you are thinking of making a gift in your will, keep the potential benefits in mind. Your gift can:

  • Serve as a source of personal satisfaction.
  • Help accomplish important personal goals as an integral part of your estate plan.
  • Provide tax and financial rewards for family or other beneficiaries.

Flexible planning

There are many ways to make a gift in your will:

  • It can be outright or deferred.
  • It can be absolute or contingent upon certain events.
  • It can honor a beloved family member or cherished friend.
  • It can provide general support to a charity, or it can be restricted to a certain purpose.

You retain full use of your assets during life, so there is no immediate out-of-pocket cost, reduction in net worth, or disruption of cash flow. What’s more, you remain in complete control of the process, meaning you can change your gift later if circumstances change. Of course, you should rely on your attorney to draft your will. When you include a gift to us in your will, make sure to identify our institution by its formal legal name, Indiana University Foundation

An outright or deferred gift

It is common to think of a gift in a will as an outright gift—a direction to distribute a specific asset or a certain sum of money to a designated charitable beneficiary. But it is also possible to make a deferred gift, with individual beneficiaries receiving immediate benefits and Indiana University receiving benefits at some later time.

An outright gift

To make an outright gift in your will, simply specify:

  • A dollar amount (say, $10,000) or an asset (such as 100 shares of stock).
  • A percentage of the value of your estate (this allows the charity to share in the increase or decrease of the estate value, which can change quickly and dramatically).
  • What’s left in your estate after all costs, debts, and taxes have been paid and all bequests have been satisfied (appropriate when you want other bequests to have priority).

Your personal objectives should determine the exact form of your gift. Consult your attorney for advice and assistance. The IU Foundation gift planning team is also available to provide guidance.

A deferred gift

A deferred gift via a gift annuity or trust can add a great deal of flexibility to your estate plan by creating an income stream. It allows you to provide for one or more family members or other beneficiaries first, and then provide a gift to Indiana University later. A deferred gift can take many forms, but generally it will pay an annual income to one or more beneficiaries for life (or for a period of years), then pass the property to IU when the income payments end.

An example

Ava is a 70-year-old widow who wants to make a gift in honor of her late husband’s support of IU. However, her older sister, Betty, needs financial help. By setting up a charitable remainder trust in her will, Ava can direct that when she dies, Betty will get an income for life, with any remaining funds left to Indiana University at Betty’s death. Ava has ensured lifelong support for her sister, honored her husband’s memory, supported to our mission, and secured an estate tax charitable deduction for the present value of our portion.

All examples are for illustrative purposes only.

Financial and tax benefits

Charitable gifts are motivated by a desire to make a difference by providing support for a meaningful mission. However, the tax rewards often let donors give more to charity than would otherwise have been possible. Every dollar you give to a qualified charitable organization through an outright or deferred gift in your will is fully deductible for federal estate tax purposes when all legal requirements are met.

If your estate may be subject to the federal estate tax, minimizing the impact of this tax on beneficiaries becomes an important consideration. Since gifts in your will remove assets from your estate, they can help minimize the impact of the estate tax.

Many of our supporters make regular annual gifts, and they choose to continue this support for many years to come through gifts in their wills.

For example, Avery customarily makes an annual gift of $2,000. He designates a $50,000 gift to us in his will as an endowment. Given a 4.0% endowment payout, his gift will distribute $2,000 in its first year. The endowment will continue to generate income, benefitting our mission for many years to come.

Planning a personally satisfying gift

There are many ways to make a generous gift in your will that can help you accomplish your specific planning and philanthropic goals. We sincerely hope that you will include Indiana University in your plans. If you do choose to make a gift in your will to support the university’s  work, please let the IU Foundation know. We can answer any questions and help you plan your gift in a way that is both effective and personally satisfying. You will also help IU plan for the future, knowing that we can depend on your generous support.