The Charitable Remainder Annuity Trust
The annuity trust provides for payment of a fixed dollar amount—annually or at more frequent intervals—to the designated beneficiary(ies).
The amount must equal at least 5 percent of the initial fair-market value of the trust. At the death of the last beneficiary, the trust principal is distributed to .
In addition to the income you will receive from the trust, you will also be entitled to a charitable income-tax deduction for the value of our remainder interest in the trust assets.
For example, George and Mary Carlson purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. Now that they are both aged 65, they would like to augment their retirement income. To do this, they transfer the stock to a charitable remainder annuity trust with a 6 percent payout rate.
In the first year, they will receive a $6,000 payment—four times the dividends they have been receiving—and they will continue to receive $6,000 each year for the rest of their lives. Moreover, they avoid tax on their profit in the stock, and they receive an income-tax deduction of about $28,000. In their 33 percent tax bracket, this saves them $9,240 in income taxes (33 percent of $28,000).
When the last beneficiary dies, the annuity trust assets will benefit any program you choose.
Click here for our eBrochure related to Charitable Remainder Trusts.
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