LIFE INCOME PLANS

 

THE CHARITABLE GIFT ANNUITY

The Charitable Gift Annuity is a contract between a charity and a donor in which you exchange a gift of cash or securities for a guaranteed, fixed income for life.  The annuity rate is based upon the life expectancy of the donor at the time of the gift, and increases with the age of the donor.  Upon the death of the donor and/or the beneficiary, what is left in the contract passes to the charitable organizations that you have designated.

Tax Benefits

You receive a charitable income tax deduction, based upon the present value of the future gift to charity, and the full value of the gift is reduced from your estate.

For your life expectancy, a portion of each annuity payment is considered tax-free return of principal, and therefore is not subject to income tax.  If you live longer than your life expectancy, all payments are subject to income tax.

The annuity payment on gifts of appreciated property is based on the full fair market value of the donation.  The gift is considered part tax-free return of principal, and therefore avoids some of the capital gain taxation.  The capital gain, which is taxable, is prorated over the donor's life expectancy.  Executing a simple contract between the Jewish Community Foundation of Greater Kansas City and the donor is all that is required to establish a Charitable Gift Annuity.

Annuities can be established for the benefit of organizations within the Jewish community at the Jewish Community Foundation for as little as $10,000.

Types of Charitable Gift Annuities

One-life or two-life charitable gift annuities for those who are 65 years and older are available.  In addition, deferred gift annuities are available for those 60 years and older.

 

THE CHARITABLE REMAINDER TRUST

The Benefits

A Charitable Remainder Trust (CRT) is an excellent way to leave a legacy while allowing you to:
Generate more income for yourself or your family
Remove assets from your taxable estate
Receive a significant charitable tax deduction

The Specifics

A Charitable Remainder Trust is a tax exempt irrevocable Trust created by a donor which provides income to the donor and/or another named beneficiary, for life or a term of years. Upon the death of the donor and/or beneficiary, the remaining value of the Trust will pass as a gift to the Jewish Community Foundation to be used as you have designated.

To receive the greatest tax benefit when establishing the Trust, transfer highly appreciated property to the Trust, and possibly delay or avoid paying capital gains tax.

You will receive an immediate income tax charitable deduction equal to the present value of the future gift to the Foundation. If you cannot use the full deduction in the current year, you may carry the deduction forward for five additional years.

Types of Charitable Remainder Trusts

There are several types of Charitable Remainder Trusts, each offering a unique set of benefits. However, all provide an immediate income tax deduction and income for you and/or your named beneficiary.

	A Unitrust provides income payments for life or a period of years, to you and/or your named beneficiary, based upon a fixed percentage of the fair market value of the Trust, valued annually. The income amount will vary yearly. You may add to the Unitrust at any time.
	A Net Income Trust provides payments of the lesser of the net income of the Unitrust or a stated percentage of the Fair Market Value of the Trust, valued annually. Principal may not be invaded if the income is insufficient to meet the required payment.
	A Net Income With Make-Up Unitrust provides payments of the lesser of the net income of the Unitrust or a stated percentage of the fair market value of the Trust, valued annually. If the net income is less than the stated percentage for a particular year, the trustee may “make up” payments in a later year if the Unitrust’s income exceeds the percentage payout. This type of trust works especially well when funded with assets that are illiquid such as real estate.
	An Annuity Trust provides an annual fixed dollar payment for life or a period of years, to you and/or your named beneficiary (not less than 5% of the Trust’s assets). You may not make any additional contributions to an Annuity Trust.