A charitable remainder annuity trust (CRAT) can provide fixed income for life (or a term of years) while creating a significant future gift to charity_name.Payments remain the same each year, offering predictable, reliable income.
A CRAT may be right for you if:
- You want fixed, dependable income.
- You want to reduce income or capital gains taxes.
- You wish to select your own trustee.
- You are considering a gift amount of $250,000 or more.
- You would like your gift to benefit one or more charities.
Example
Anna, age 84, has various appreciated stocks in her brokerage account with a combined value of $500,000. The stocks cost $200,000 to purchase and provide her with approximately $10,000 in annual dividend income. Anna would like to increase her cash flow, not worry about market fluctuations, and arrange for an endowment at charity_name.
Anna finds that creating a charitable remainder annuity trust will achieve her goals nicely. She transfers her $500,000 in stock to an annuity trust with a 5.0% payout rate.
Benefits
- Anna will significantly increase her cash flow from her gift assets, from $10,000/year to $25,000/year.
- She will receive an immediate income tax charitable deduction of about $364,420*.
- Her trustee will be able to sell her stock immediately in order to diversify her trust's investments without paying any capital gains tax. As a result, all of her assets will be working for her and for charity_name.
*Anna’s income tax charitable deduction will vary depending on the timing of her gift.
How Your Gift Helps
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