GIFTS THAT PAY INCOME
The Donor may make a gift to HelpMeSee and choose to receive an annual income payment to the Donor, the Donor’s spouse or another individual for their lives or a term of years. The Donor may also receive an immediate income tax deduction, during the first year of the gift that may be carried over for the next five years, if unused, subject to IRS limitations. The Donor may also avoid all capital gains tax on the sale of the property by HelpMeSee. Lastly, the Donor will avoid any estate taxes on the gift to HelpMeSee.
WHAT TYPE OF GIVING ARE YOU INTERESTED IN?
CHARITABLE REMAINDER UNITRUST (CRUT)
A Charitable Remainder Unitrust or CRUT is a planned gift that pays a percentage of the trust assets back to the Donor annually. The trust assets are re-valued annually, so the payment back to the Donor may be increased or decreased each year depending on the value of the trust assets. The donor may choose to have his or her spouse, or another individual, included as an income recipient for their joint lives.
The income payments to the Donor and/or another individual will be a fixed percentage of not less than five percent (5%) of the fair market value of the trust assets. The income payments to the Donor may be for a designated term of years or for the lives of the Donor and other income recipients.
The Donor may add or gift other assets to the unitrust at any time in the future.
The Donor may also gift additional assets to the unitrust through their last will and testament or through a beneficiary designation form or other legal methods of transfer.
The Charitable remainder Unitrust offers the Donor a hedge against future inflation due to appreciation and since any income not paid to the donor is added back into the unitrust principal. Therefore, as the unitrust principal increases each year and since the payments are based on the principal, the payments to the Donor ideally should increase also. Likewise, the same would hold true if the unitrust assets decreased in value, the payments to the Donor would proportionally decrease also.
“FLIP” CHARITABLE REMAINDER UNITRUST
The Donor will receive the annual payments of the unitrust until a pre-determined event occurs, designated, in writing, by the Donor. The event or the “flip” may be the pre-determined sale of highly appreciated assets held by the unitrust, on a specified date, such as a future birthday of the Donor, or an event not controlled by the Donor, the trustee or anyone else, such as the death of the Donor.
After the “flip” the trustee of the unitrust will pay the Donor, or other income recipient, a fixed percentage of the unitrust assets valued annually, regardless of the income earned annually by the unitrust. As the unitrust value ideally increases each year, the payments to the donor will increase also.
A gift of low income producing highly appreciated property may be used to initially fund the unitrust, whereupon capital gains taxes are completely avoided upon the sale of the appreciated asset by the trustee of the unitrust. The Donor will receive a present-day income tax deduction in the first year of the existence of the unitrust that may be carried over if not completely used for another five years. The federal income tax deduction is subject to the thirty percent (30%) limit of adjusted gross income on gifts of property and sixty percent (60%) limit of adjusted gross income on gifts of cash. The Donor also will not be subjected to any estate taxes on any of the assets gifted or transferred to the charitable remainder unitrust.
UPON THE DEATHS OF THE DONOR AND OTHER INCOME RECIPIENT OF THE CHARITABLE REMAINDER UNITRUST AND OR THE “FLIP” UNITRUST, THE PRINCIPAL OF THE UNITRUST IS TRANSFERRED TO HELPMESEE AS AN UNRESTRICTED GIFT OR TO BE USED FOR THE PURPOSES AS THE DONOR HAS STIPULATED.
CHARITABLE REMAINDER ANNUITY TRUST
The Charitable Remainder Annuity Trust pays a fixed dollar amount to the Donor and the Donor’s spouse or another income beneficiary for the life of the Donor and another income beneficiary. The designated amount remains the same for the lives of the Donor and the other designated beneficiary, usually a spouse. No additions may be made to the Charitable Remainder Annuity Trust and, unlike the Charitable Remainder Unitrust, the assets are not re-valued annually. The Charitable Remainder Annuity Trust is valued only once, upon its creation and will always pay the same fixed percentage, annual payment (the annuity) to the named beneficiaries for the duration of their joint lives.
The fixed dollar annuity payment allows the Donor and another beneficiary, usually the spouse, to know and depend on, up front, what the annuity payments will be each year, for the rest of their lives.
The Donor will receive a present-day income tax deduction on the value of the gift to HelpMeSee determined by the ages of the Donor and another beneficiary. Any unused income tax deduction may be carried over for an additional five years subject to the 30%/50% limitations on adjusted gross income. The asset used to fund the annuity trust will also be removed from the Donor’s estate avoiding estate taxes.
When the Charitable Remainder Unitrust or the Charitable Remainder Annuity Trust ends, upon the deaths of the Donor and beneficiaries, the principal of the trust is then gifted and transferred to HelpMeSee as an unrestricted gift to be used for the purposes designated by the Donor.
CHARITABLE LEAD TRUST
A Charitable Lead Trust is an excellent way for the Donor to make a gift to HelpMeSee and to preserve and increase the value of assets for the Donor’s heirs. Ideally, for a Donor that does not need a present-day stream of income, or for the Donor who wishes to defer income to the Donor for a specified number of years, while ensuring that the principal goes back to the Donor, or to the Donor’s heirs, preferably the Donor’s children or grandchildren. In other words, HelpMeSee does not receive the principal of the charitable lead trust when it ends.
The Donor transfers an asset to the lead trust which is either income producing or HelpMeSee sells the non-income producing asset for an income producing asset, whereupon the income from the asset or principal is gifted to HelpMeSee for a specified number of years or until the Donor’s death. At that time the asset or principal returns to the Donor or to the Donor’s heirs.
The Donor is entitled to a present-day income tax deduction, to be carried over for an additional five years, subject to the limitations on adjusted gross income. The donor avoids any capital gains tax on the sale or appreciation of the principal while the asset is in the lead trust. Finally, upon the death of the Donor, the Donor’s estate avoids the estate tax on the principal of the Charitable Remainder Lead Trust.
CHARITABLE GIFT ANNUITY
A Charitable Gift Annuity is an agreement between the Donor and HelpMeSee whereby the Donor agrees to gift a specified dollar amount to HelpMeSee and the Donor receives fixed income payments, determined by the date of birth, for the rest of the Donor’s life. The Donor may add his or her spouse, or another individual for a two-life annuity. The Donor knows that each year He or She will receive the exact dollar amount as stated in the annuity agreement.
The Donor receives a present-day income tax deduction for the value of the gift to HelpMeSee and a portion of the annuity payments are income tax-free for a number of years, determined by the value of the annuity gift and the ages of the income recipients. Also, the principal used to fund the charitable gift annuity is removed from the Donor’s estate avoiding estate tax.
DEFERRED CHARITABLE GIFT ANNUITY
If the Donor is of younger years or if a Donor wishes to establish a Charitable Gift Annuity for his or her child, then the Donor may wish to defer the start of the payments for a specified number of years or until the income recipient reaches a certain age. This will ensure a higher rate and increased payments to the income recipient as determined by his or her date of birth.
If you would like to speak to someone at HelpMeSee or have questions, contact our Senior Director of Development, Steven Moore at (859) 264-1071, or, you could send an email to Steven by clicking the following button:
OUR PROMISES TO YOU
- We will use your donation carefully where it is needed most to support our work in the developing world.
- We understand that family and loved ones come first. We will always honor your wishes.
- We recognize that making a gift of this type is a deeply personal decision. You can tell us that you left a gift to HelpMeSee in your will, but you do not need to. We will keep your gift private as instructed. You have the right to change your mind.
The information is not intended to be legal, accounting, or other professional advice. For assistance in charitable planning, consult a lawyer or the services of a qualified professional tax advisor.
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