Expert Q&A

What charitable giving plans return income to donors?

I understand there are some trusts or other types of plans that may allow me to still receive some income from my gift? What are the different options and how do they work? Can the income still be passed on to my beneficiaries?


Related Topics: Investments, Charitable Giving, Tax Returns and Preparation, Taxes
Related Tags: Trust, Gift, Income
Skip Jacobs
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By Skip Jacobs - Abiding Wealth Advisors
Answered about 3 years ago

On my last answer, I forgot to mention that yes, your heirs can be beneficiaries on either a CRT or a CGA. There are some limitations in certain situations.

Skip Jacobs
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By Skip Jacobs - Abiding Wealth Advisors
Answered about 3 years ago

Two of the more common arrangements are
1.Charitable Gift Annuities
2. Charitable Remainder Trusts
A CGA is a contract between the donor and the charity whereby the donor gives money to a charity in exchange for a promise of a future income stream either for life or for a fixed time period. You receive an upfront tax deduction. The rate upon which payments are made is dependent upon several factors including your age, date that the payout commences, and whether the income is for life or for a fixed period. Many charities use rates published by the American Council on Gift Annuities.The minimum amount that many charities will accept is $10,000.
A CRT is a trust funded with property that will provide an income stream to the donor for a fixed time period-ex 10yrs. At the end of the time frame, the “remainder”(hence the name) goes to the named charity. Again, the donor gets an upfront tax deduction. One of the main benefits of a CRT is that if it is funded with non cash property such as real estate-when the real estate is sold-capital gains tax can be avoided. Due to the costs of a trust, typically, the minimum amount that makes sense is $100,000.

Tim Murray
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By Tim Murray - Crossroads Insurance Answers
Answered about 3 years ago

One option is a Charitable Remainder Unit Trust or CRUT. You make a donation of property or liquid asset to a charity and receive a partial tax deduction in the year donated. The asset is turned into cash and invested by the charitable institution. They in turn provide you with a % income (based upon your age) for your lifetime or your joint lifetime if you are married (and wish this option). At your death the balance of the asset goes to the charity. If they invested wisely it could be worth more than you gave. One way to maintain a benefit for your heirs is to use a portion of the income to purchase a life insurance policy on yourself. You receive some income and your heirs receive a death benefit.

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