Gifts that pay you income
Charitable Gift Annuities
Charitable gift annuities provide donors with guaranteed fixed payments for life and an immediate income tax deduction while allowing them to make a significant gift to a good cause they care about.
Gift annuities are easy to establish and can be funded with a minimum gift of cash or stock of $20,000. The annuity rate is based on your age. Typically, you must be at least 60 when payments begin. Gift annuities can provide lifetime payments to one or two people.
Gift Annuity Example: Mary Richards, age 75, funds a $25,000 charitable gift annuity contract to benefit Catholic Charities. Her annuity rate is 6.2%, giving her annual payments of $1550 for her lifetime. Mary also receives a tax deduction she can use if she itemizes. And Catholic Charities will receive much-needed financial support to continue to serve vulnerable communities in the Bay Area.
Charitable Trusts
Here’s how a charitable trust works in 3 steps:
Step 1: Donors make irrevocable transfers of assets to their trust
Step 2: The trust begins to pay income and provide tax benefits
Step 3: When the trust ends, what remains in the trust account goes to charity
With charitable trusts, donors can convert assets into lifetime income while saving on taxes. And they’ll have the satisfaction of providing significant support to good causes like Catholic Charities.
Assets used to fund charitable trusts (cash, stock, or real estate) are sold and invested to pay income to one or more income beneficiaries for life or a term of years. Your trust can also pay income to your heirs for life or for a term of years.
Owners funding charitable trusts with appreciated assets like stock or real estate bypass the capital gains tax they would have owed had they sold these assets outright. If the assets are highly appreciated, this benefit of charitable trusts can be significant.
And, as assets used to fund charitable trusts are no longer part of the donor’s estate, charitable trusts can reduce or eliminate estate tax. When the trust expires, the remainder is distributed to one or more good causes named by the donor.
