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Charitable Remainder Annuity Trust – Stable Income at
a Negotiated Rate
What is a charitable remainder annuity trust?
A Charitable Remainder Annuity Trust is a separately invested
and managed charitable trust that pays you, your spouse, and/or other beneficiaries
a fixed annuity income for life or a term of years. You receive a charitable
income tax deduction for a portion of your gift to the trust. No additional
gifts are permitted. After the annuity trust terminates, the accumulated
principal or "remainder interest" goes to Abington Memorial Hospital Foundation.
Minimum gift is usually $50,000. For those who can make
a gift of this size, the advantages are considerable.
- Receive stable, predictable income (particularly
appealing to older donors and income beneficiaries).
- Depending on how your trust is invested,
much of your income could be taxed at the capital gains rate of 15%.
- Avoid capital gains tax on appreciated
assets at the time you donate them.
- Reduced estate tax liability if your estate
is at the taxable level.
- Enjoy the satisfaction of making a deferred
gift to Abington Memorial Hospital Foundation during your lifetime.
Example
A 70-year-old donor in the 35% tax bracket establishes an annuity trust with $100,000 of appreciated stock, originally purchased for $10,000. Trust pays donor 6.0% of the initial value as an annuity for life. Trust earns an 8.0% average total return. Assume IRS discount rate of 5.8%.
Trust
principal |
$100,000 |
Income
tax deduction |
$47,168 |
Income
tax savings (35%) |
$16,589 |
Cap.
gains tax savings (15%) |
$13,500 |
Annual
income |
$6,000 |
Projected
after-tax benefit to donor |
$70,247 |
Projected
benefit to Abington Memorial Hospital Foundation |
$160,649 |
PLEASE NOTE: These examples are for illustrative purposes
only and are not intended as legal or tax advice. Consult your own legal
and tax advisors prior to making any material decisions based on this data.
Send me a Personal Illustration!
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For more information
E-mail us,
complete the Personal Illustration form, or
call us at 215-481-4019 so that we can assist you.
Abington Memorial Hospital Foundation
1200 Old York Road
Abington, PA 19001
215-481-4019 | Fax: 215-481-4019
E-mail: acarthy@amh.org
*Notice: Consult your legal and tax advisors before making any material decisions based on this information.
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