Charitable Remainder Annuity

How It Works

  • You transfer cash, securities, or other appreciated property into a trust. Our suggested minimum gift requirement is $100,000.
  • The trust makes fixed annual payments to you or to beneficiaries you name.
  • When the trust terminates, the remainder passes to IHC to be used as you have directed.

Benefits

  • Receive income for life or a term of years in return for your gift.
  • Receive an immediate income tax deduction for a portion of your contribution.
  • Pay no upfront capital gains tax on appreciated assets you donate.
  • Your trust can meet personal or family needs that are tied to a specific time frame, such as tuition payments.

Frequently Asked Questions

Who can serve as trustee of my annuity trust?

In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.

How would the assets in my annuity trust be invested?

Typically such a trust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. An annuity trust may also hold tax-free bonds.

Is it better to give cash or appreciated securities?

Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

How will income from my annuity trust be taxed?

Your income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal.

Can I name my children as income beneficiaries?

Yes; subject to certain limitations.

What are the tax deduction implications of my charitable remainder trust?

A charitable remainder annuity trust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.