Gifts That Pay You Income
There are three types: Charitable Remainder Trust (CRT)A CRT is a flexible vehicle that allows your clients to make a substantial charitable gift while maintaining an income stream for themselves and/or others for a fixed number of years. When this period expires, the remaining assets pass to a Community Foundation fund of their choosing. Charitable Remainder Trusts are particularly well-suited for gifts of appreciated securities and other assets, such as real estate or underperforming stock. Because the CRT is tax-exempt, it protects the asset without incurring capital gains taxes, and thus can be reinvested for a higher yield. The CRT option is best for gifts of $250,000 or more+. It can be established during your clients' lifetimes or through their will. The Community Foundation can act as remainderman for their CRT(s) by establishing endowed funds in the name of the original donor to make gifts in perpetuity to the nonprofit organization(s) of the donor's choosing. Successive generations of family members may be involved in the distribution of grants if the donor so wishes. In short, Charitable Remainder Trusts are a flexible planned-giving option that helps your clients eliminate capital gains taxes, reduce or erase estate taxes, improve lifetime cashflow when paired with an asset-replacement trust, and provide for their heirs. Charitable Gift Annuities (CGA)A CGA is an agreement between your clients and The Community Foundation. The client agrees to make an irrevocable gift of at least $10,000 to The Community Foundation; in return, s/he receives a fixed, guaranteed income from The Foundation each year for the rest of his or her life (and/or the lives of other persons whom s/he designates). Upon the death of the life income beneficiary, the remaining value of the annuity gift is allocated to an endowed Community Foundation fund of your client's choosing. This fund then pays income to the nonprofit organization(s) that your client designates in the agreement. With a charitable gift annuity, your clients can start receiving income immediately, or they can defer the start of annuity payments until a later date. And, because these payment can be deferred, gift annuities are a popular vehicle for supplementing retirement income. Annuity rates are based on the age of the annuitant(s) at the time the gift is made as well as on whether the income payments begin immediately or are deferred. The older the designated annuitant(s) at the time of the gift, the greater the fixed income The Community Foundation can agree to pay. In short, a CGA can help ease the worry of outliving financial resources by providing a high income along with numerous tax advantages. Pooled Income FundsThe Community Foundation's Pooled Income Fund enables your clients to make a gift to a permanent fund at The Community Foundation while benefiting from lifetime income tax savings. Their gifts of at lease $5,000 to The Foundation's Pooled Income Fund is co-mingled with gifts from other donors to maximize investment. They receive quarterly distributions of the income earned by the Fund based on their proportional share. Additional gifts of at least $1,000 may be made to the Fund at any time. Upon the death of the last income beneficiary, your clients' portion of the Fund principal will pass to a perment Community Foundation fund or to the charitable organization(s) of their choice. In short, the Pooled Income Fund provides a stream of income for life for up to two beneficiaries. Donors receive an immediate charitable income tax decduction in the year the gift is made, and avoid capital gains taxes on long-term appreciated property. For More InformationKenny Emson |
