California Estate Planning Lawyer Blog

* “The income of the Fund shall be used to provide four (4) year tuition scholarships, to be known as the ‘William H. Higbie Memorial Scholarship,’ hereinafter referred to as the ‘Scholarship.’ Such Scholarship shall be awarded each year, beginning with the end of the first full scholastic year, occurring at least twelve (12) months after my death, to graduating seniors of Huntington High School who shall qualify as recipients thereof.

“ Recipients of the Scholarship shall be selected by a Committee comprised of three (3) members appointed by the Board of Education of the School District from among the Business Education faculty, the general faculty, and the administrators of the Huntington High School. Committee members shall serve on the Committee for such period of time as the Board shall determine but only so long as their affiliation with Huntington High School continues.

“ The Committee shall solicit and review nominations and applications for the Scholarship, and, in its sole discretion, select qualified recipients. The amount of a Scholarship shall be determined by the Committee, but shall be of sufficient size as to provide a significant contribution toward the payment of a recipient’s college tuition costs, even up to the full amount thereof.

“ The Committee shall determine the number of Scholarships that may be awarded in any year. To qualify as a recipient, a candidate must:

(i) be a graduating senior from the Huntington High School interested in pursuing studies in the field of business education;

(ii) be accepted and registered into a full-time course of study at an accredited institution of higher learning requisite to the granting of a degree from that institution in the area of business education; and

(iii) have a need for financial assistance in paying tuition costs incurred in attending such institution.

* “To remain qualified during the balance of the four-year term of the Scholarship, a recipient must:

(i) remain enrolled in a full-time course of study as described above;

(ii) maintain a 2.0 grade point average or better; and

(iii) submit to the Committee satisfactory proof of enrollment and grades attained prior to the beginning of each scholastic year during the term of the Scholarship.

* "The Committee shall pay the amount of a Scholarship directly to the learning institution attend or to be attended by a recipient to the credit of the recipient on account of tuition charges.

* “If the Committee should determine, in its sole discretion, that the Fund income available for the awarding of new Scholarships in any year is so small an amount so that the awarding of Scholarships therefrom would not significantly contribute to the payment of the recipient’s tuition costs and would serve to detract from the dignity and prestige of the Scholarship, the Committee may determine not to award any Scholarship in any such year.

* “Any Fund income not expended in a given year, whether due to reasons described in subparagraph 7, or because the Committee determines that there are no qualified candidates, or because a recipient does not remain qualified, or for any other reason, shall become part of the principal of the Fund, to be held, invested, and managed in accordance with the foregoing.”

The Huntington School Board accepted these terms, and on October 16, 2006, the board accepted a check for $710,862.92 on behalf of the Huntington School District and voted unanimously to create the William H. Higbie Memorial Scholarship Fund.

A charitable remainder trust can be set up by anyone who wants to gift some of their income or assets to a charitable cause. A charitable remainder trust is irrevocable—meaning it can’t be changed.

How a charitable remainder trust works:

· The donor sets up the CRT by making a gift to it and receives an income tax deduction in the process.
· The trust sells the assets, reinvests the proceeds, and pays income the donor.
· The charity or charities will receive the remaining trust balance at the end of the trust’s term or when the donor passes away.

Pacific Life explains the benefits of setting up a CRT:

Provides a current income tax deduction:
A gift to a CRT creates an income tax deduction for the donor (of the present value of the charitable gift). This current income tax deduction helps offset the donor’s taxable income.

Defers capital gains taxes:
Because a CRT is tax-exempt, capital gains tax liability is deferred when the gifted appreciated assets are sold by the CRT. This allows the CRT to convert the full value of the asset into an investment that can provide a lifetime income for you and your spouse.

Reduces or eliminates estate taxes:
Since the donated assets generate a charitable estate tax deduction upon the death of the income beneficiary, estate taxes may be decreased or eliminated. These changes may affect charitable and estate planning goals. Therefore, donors should consider the tax benefits very carefully and consult with a tax adviser before transferring assets to a CRT.

Provides an income stream, often for life;
When assets are donated to a CRT and sold, the money generated from the sale may be placed in an income-producing investment. The income is then distributed according to the trust provisions. For some types of CRTs, principal may also be distributed. Because there have been no capital gains taxes paid, the amount invested may be greater than if the assets had been sold outside of a CRT and had been subject to capital gains or income taxes.

Benefits the charity of your choice:
When the trust ends, the assets remaining in the trust pass to the charity of your choice.

Sagaria Law, P.C., represents clients in the Santa Clara County, Monterey County, and Alameda County in estate planning matters. We can help you set up a trust, write a will, and handle any other estate planning-related considerations you might have. We have offices in Monterey, San Jose, and Fremont, so visit one of our offices, contact us online, or call us at 1-800-941-6730.

New $710K Higbie Scholarship Open to Potential Business Teachers, Liconnection.com, November 15, 2006

Former Business Teacher Endows $710K Fund, The LiConnection.com, October 24, 2006

Understanding Charitable Remainder Trusts, Pacific Life.com

Related Web Resource:

2006 Draft Charitable Remainder and Pooled Income Trusts, (PDF)