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Charitable Gift Annuity and Deferred Gift Annuity
A charitable gift annuity is a contract between the donor and Brevard College whereby, in exchange for an irrevocable gift of cash or certain other assets, Brevard agrees to pay the donor a certain amount of money for the rest of the donor's life. The gift annuity could also pay an income for the life of both the donor and another person, usually a spouse. The donor gets an income tax charitable deduction for a portion of the amount transferred, receives partially tax-free income, can spread any capital gain tax due on the transfer of appreciated assets, and avoids estate tax on the amount transferred to Brevard under the annuity contract.
With a deferred gift annuity, the start of payments is delayed until a specific date determined by the donor. Deferral of payments increases the initial income tax charitable deduction, tax savings and the annuity rate. However, it also reduces the nontaxable amounts to be received. This option is appealing to younger donors who wish to improve future income, such as at retirement.
Charitable Remainder Trust
A trust is a legal entity created to own and manage money or property, typically for a limited duration or term. A charitable remainder trust is one that, during the term of the trust, pays a life income to one or more beneficiaries (usually the donor and spouse or children).
Charitable remainder trusts are often used to convert highly-appreciated assets into life income payments without paying capital gains tax now or estate taxes later. With a charitable remainder trust, you transfer assets to the trust and receive a current income tax deduction with a five-year carry forward available. As Trustee, Brevard will sell the assets with no capital gains tax liability. Your highly-appreciated assets will be unlocked to produce higher income. Brevard will use the cash from the sale to invest in assets that will provide income payments at a rate agreed upon by you and Brevard. These assets grow tax free. When the trust terminates, the trust assets go to Brevard.
Charitable Lead Trust
If your current income is greater than what is required to provide for your family’s needs and you wish to hold onto all your capital assets, the charitable lead trust may be an appropriate planned giving choice for you. The charitable lead trust can also provide substantial benefits if you want to pass on assets to your heirs while minimizing gift and estate taxes. You may even be able to provide your heirs with a larger inheritance than might otherwise be possible.
A charitable lead trust is the converse of a charitable remainder trust. With a charitable lead trust, Brevard College receives income payments from the assets you transfer to the trust, and the remainder is distributed back to you or to your children. Income payments to Brevard will be a fixed percentage of the fair market value of the trust assets. After a predetermined number of years, the trust reverts to you or your children.
A charitable lead trust enables you to shelter your estate for tomorrow while making a gift of a lifetime that benefits the College today. It is a wise choice for individuals focused on preserving assets for their children by reducing or eliminating income, estate, and gift tax liability. |
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