Gift Planning

Donor Stories

William Kerchof ’49 Considers Colgate Gift Annuities Attractive

In his first job with New York Telephone, William Kerchof ’49 helped make sure switchboards had enough operators to match the incoming patterns of telephone traffic. He had to be prepared and plan ahead.

That desire to be prepared explains why the retired North Carolina resident has invested in five separate two-life charitable gift annuities with Colgate. Payments from a charitable gift annuity are fixed at the outset and guaranteed. No matter what happens to interest rates or the stock market, the payments will never decrease. University Treasurer David Hale advises that annuity funds are managed as a specific and separate conservative account backed by the university.

"The annuities provide protection for my wife," said Bill. "I have the assurance that when I leave this world, she will have the same amount of income coming in."

Bill credits his liberal arts education as the foundation for his success in business. After Bell Telephone, he worked at a private investment company. He knows from personal experience that gift annuities are an attractive opportunity. Bill appreciates the fact that his gift annuities are well managed, they are diversified, and they observe New York State requirements. Looking back, he wishes he had made larger and more such placements years ago.

"You receive a guaranteed stream of income for one or two lives, and the quarterly payments are based on your age(s)," he said. By funding the gift with appreciated securities, "you receive a front-end tax deduction limited to 30% of your AGI (adjusted gross income)." The deduction limit increases to 50% if the gift annuity is funded with cash. Regardless of how the gift annuity is funded, Bill explains that "you may carry forward any unused part of the deduction for an additional five years. Also, if you fund a gift annuity with appreciated securities, approximately one-third of each payment is taxed as ordinary income, one-third as capital-gain, and one-third is tax-free."

By funding a gift annuity with appreciated stock, Bill partially avoided capital-gain tax. He noted that if you fund a gift annuity with cash a larger portion of your gift annuity income would be tax-free over your life expectancy. This is especially attractive if you want to cash in a low-interest CD to generate higher income.

Bill comments, "For those in the 65 to 75 age bracket, this is an opportunity that deserves serious consideration."

The discussion herein is general in nature and may not apply to all individuals. Prospective donors are urged to consult their personal tax and financial advisors concerning the specific consequences of making gifts to Colgate. We would be pleased to discuss, in confidence, ways in which you may support Colgate. These measures may also have an impact on your estate planning.