Life Income Gifts

Planned Giving and Bequests

For more information about the Law School's planned giving program or to request a specific gift illustration, please contact:

Charles B. Gordy II, J.D.
Director, Planned Giving
Harvard Law School
125 Mt. Auburn Street
Cambridge, MA 02138
Tel: 617-496-9265
Fax: 617-495-9684
E-mail: cgordy@law.harvard.edu

Life Income Gifts

Through life income plans you can Give Online to the Law School while retaining income for you and or another person for life or a term of years. Other attractive benefits include the following:

Increase your income from low-yield stock.
Obtain professional management from the Harvard Management Company.
Provide a surviving income recipient.
Qualify for a one-time Federal income tax charitable deduction equal to a portion of the gift amount.
Avoid up-front tax on any long-term capital gain.
Reduce or eliminate estate tax on the donated asset.
Ability to specify a preference for the use of your gift at Harvard Law School.

There are three ways you can make a life income gift: Charitable Remainder Trusts, Charitable Gift Annuities, and Pooled Income Funds.

The Harvard Management Company serves as trustee and investment manager for over 550 charitable remainder trusts and charges no management fees for its services. These trusts are individually managed and may be funded with cash, stock, bonds, tangible property, and real estate. They provide great flexibility with regards to income payments, investment objectives, types of income, and tax deductions. The trust principal ultimately comes to Harvard. In addition, Harvard-managed trusts may now be invested directly in the Harvard endowment, with the potential for very attractive income growth over time.

The charitable remainder trust may be created for the life of the beneficiaries age 50 or older, or for a term of years, not to exceed 20 years. Harvard requires a minimum gift of $100,000 to create a remainder trust. The trust should have no more than two beneficiaries, except for trusts created for a term of years, which permit more than two.

There are two types of charitable remainder trusts - the Unitrust, which pays a variable stream of income, and the Annuity Trust, which pays a fixed dollar amount. This income typically is taxable at the beneficiery's ordinary tax rate. When the trust terminates, the principal goes to the Law School for the purpose named in the trust instrument.

The charitable remainder trust is recommended by many estate planners as a vehicle to receive gifts of appreciated property (to avoid the capital gain tax) as well as testamentary transfers of remaining assets in qualified retirement plans, such as IRA, 401(k), profit sharing, and Keogh plans. This technique is suggested as a means for escaping an income tax liability to the estate ("income in respect of decedent"). The trust also provides a charitable deduction to the estate for estate tax purposes.

For more information about Harvard-managed charitable remainder trusts, please see our 2004 "Making a Difference" newsletter.

Charitable Gift Annuities

A gift annuity is an agreement between you and Harvard, whereby Harvard agrees to pay you a fixed sum of money annually for life. The amount of the annuity payment is based on the age of the annuitant and Harvard's annuity rates then in effect. Older and/or single beneficiaries typically enjoy higher income rates.

The annuity payments are usually reportable on your federal income tax return as a combination of ordinary income and tax-free income. If the gift is appreciated property, some of the income is taxed at the capital gain rate.

Annuity agreements may include a wide variety of gift assets: cash, stock, bonds, and in some cases real estate or tangible personal property. Annuity payments can begin now or be deferred until a future date, such as retirement. The minimum gift is $25,000.

Pooled Income Funds

A pooled income fund is a charitable trust that operates like a mutual fund. Gifts of many donors are combined and assigned units, depending on the amount of your gift. The minimum initial gift is $25,000, while additional gifts to the same fund may be made in increments of at least $10,000. The fund pays you and/or another beneficiary quarterly your pro rata share of the net income of the fund. Harvard offers five pooled income funds, each with a separate investment objective:

Harvard Life Return Fund (1986)—High rate of income over the long term.

Harvard Balanced Fund (1973)—Balance of income and growth.

Harvard Growth Fund (1976)—Long term growth of principal.

Harvard Equity Income Fund (1992)—Growth and income through income-producing stocks.

Harvard International Equity Fund (1992) —Growth and income through foreign companies.

For additional information about Harvard's life income gifts (including deduction calculations, investment management through the Harvard Management Company, and other links), feel free click here to visit the University's Planned Giving website.