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Pooled Income Fund
Frank Shoring, A40, with Ruth Lliliana Medina-Echeverria, Gifford House Manager
I wanted to make a gift to Tufts because I have always attributed my successes in life to the start Tufts gave me. My pooled income fund allows me to receive a little income for myself while also benefiting the university.
The Charles Tufts Society honors alumni, staff, and friends who have included Tufts in their estate or gift plans.
The pooled income fund is any easy way to provide income for yourself or others while also making a gift to Tufts University. It is structured similarly to a mutual fund since your gift of cash or securities is combined in a fund with other gifts managed by Tufts. The fund is invested in a diversified portfolio and each quarter it pays you a proportional share of the net income. When you or the last of your designated income beneficiaries passes, your portion of the fund's principal is put to use by the university for your designated purpose.
How a pooled income fund works
- You irrevocably transfer a minimum of $10,000 in cash or securities to the pooled income fund.
- You review and sign a simple agreement to complete the transaction.
- The trust pays you, or up to two income beneficiaries you name, the annual income attributable to your share of the pooled income fund.
- The principal attributed to your share is put to use when the income beneficiaries have passed.
Benefits of Tufts' pooled income fund
- You will receive an immediate income tax deduction for a portion of your gift to the fund.
- If you contribute appreciated securities to the pooled income fund, no capital gains tax is payable. You may wish to contribute appreciated but low-yielding assets and put the entire amount of your gift to work earning income for you.
- Although modest, the income usually exceeds the level of stock dividends, as it is a diversified pool of assets.
- Additional contributions of at least $1,000 can be made to the fund at any time.
Frequently asked questions about pooled income funds
- How are my payments calculated?
Your quarterly distribution will vary based on the fund's performance and yield. The fund is invested to provide income and modest capital appreciation, with preservation of capital in mind. The estimated 2010 payout rate is 2.9 percent. We will provide you with a copy of the fund's annual report, which describes its past performance and current objectives. All payments from the pooled income fund are taxed at ordinary income rates.
The pooled income fund is for you if...
- You want to make a significant gift to Tufts and receive lifetime income for you or your loved ones in return.
- You want to avoid capital gains tax from selling appreciated securities.
- You are comfortable with variable income instead of fixed payments, as your income will be based on the fund's earnings each quarter and will fluctuate.