Fundholder/Nonprofit Log In    Contact Us
 What’s new?   Search for a Fund

  • Ways to Give
    • Support the DCF
    • About Establishing a Fund
    • Fundholders: Give From Your Fund
    • Give to an Existing DCF Fund
    • Delaware Forever Fund
    • Giving Circles
      • African American Empowerment Fund
      • Fund for Women (FFW)
      • The Next Generation
      • Youth Philanthropy Board
    • About Endowed Giving
      • Why Endowed Giving?
      • Endowment Calculator
    • About Planned Giving
  • Receive
    • Apply for Grants
    • Apply for Scholarships
  • Resources
    • For Nonprofits
    • For Professional Advisors
      • Why DCF for Your Clients?
      • Planned Giving
      • Gift Law
    • For Grant Recipients
    • Forms & Policies
    • DonorCentral (for fundholders)
  • About Us
    • Vision & Mission
    • Publications & News
    • Board & Committees
    • Financials
    • Investments
    • History
    • Our Team
    • Career Opportunities
  • Community
    • About Quality of Life
    • Building Opportunity
      • Leadership Lecture
      • 2018 Book Circles
      • Focus Conversations
    • Community Indicators
      • Navigating DelawareFocus.org
  • President’s Blog

Annuities/Charitable Remainders

Some donors find that charitable gift annuities or charitable remainder trusts enable them to meet their charitable goals, take advantage of tax benefits and ensure a stream of income for the rest of their lives.  There are many types of annuities and trusts.

The Delaware Community Foundations can help you determine if an annuity or trust is right for you and, if so, which is the right vehicle for you.

The Charitable Trust Quick Reference below will give you an overview of some of the available types of trusts.

Charitable Trusts Quick Reference

Type
Charitable Gift Annuity (CGA)
Charitable Remainder UniTrust (CRUT)
Charitable Remainder Annuity Trust (CRAT)
Charitable Lead Annuity Trust (CLAT)
Set Up By
DCF staff with advice from your advisor, if desired. Must involve professional advisor. Must involve professional advisor. Must involve professional advisor.
Definition
A gift annuity is a combination of a gift to charity and an annuity and is used when a guaranteed income is desired. A gift of cash or securities is transferred to Foundation in exchange for a contractual life income. Income is guaranteed by assets of the Foundation. A portion of each payment is interest earned and taxable as ordinary income. Part of the payment is return of principal and is tax free. If an annuitant survives beyond life expectancy, all payments are taxed as ordinary income. Any capital gains taxes due on the asset that was exchanged for the annuity are paid over the annuitant’s life expectancy. Most popular and flexible life income plan; cash, securities, real property or other assets are transferred into a trust. Trustee manages trust assets and pays beneficiaries a percentage of the assets of the trust valued January 1 of each year. Payments may be for life or a term of years. When trust terminates, remaining assets in trust are transferred to Foundation for donor’s desired charity. Foundation may accept to be Trustee or may have a surviving interest in the trust. Popular life-income plan where cash, securities, real property, or other assets are transferred into a trust. Trustee manages trust assets and pays donors or others that donor chooses a fixed income for life or for a term of years. When trust terminates, remaining assets in trust are transferred to Foundation fund for desired charity. Viewed as opposite of a charitable remainder trust. Donor transfers property to lead trust, which pays a percentage of the value of trust assets, usually for a term of years, to the charity. At the end of trust term, remaining assets and any growth realized are passed to donor’s heirs. One of the few transfer devices currently used that can discount the value of original assets and result in little or no taxes. At the same time, charitable desires are met.
Tax Benefits
Tax deduction on charitable portion of initial contribution; annuity payments partially tax free based on calculations determined by IRS. Capital gains are spread over life expectancy. Donor receives an immediate tax deduction for the charitable portion of the initial contribution. Deduction based on life expectancy and payout percentage to beneficiaries. Donor receives an immediate tax deduction for the charitable portion of the initial contribution.  Deduction based on life expectancy and payout amount to beneficiaries. No income tax deduction when created but income earned in trust is not attributed to you.  Trust is taxed according to trust rates. Gift or estate tax is discounted and any growth is passed to heirs free of gift and estate taxes.
Best to Use When
Donor needs guaranteed fixed income for life and gift amount is between $15,000 and $100,000. Donor needs income for life or a specified term of years. Gift amount is over $100,000. Donor needs income for life or a specified term of years.  Gift amount is over $100,000. Has a moderate to large taxable estate; desires to pass certain assets to heirs; wants to hold assets with growth potential.
Require
–
ments
$15,000 minimum. $100,000 minimum. Should have $100,000 minimum. Estates over $5 million
Tax Reporting
Receives 1099R from Foundation. Donor will receive K-1 to be included in tax return. Donor will receive K-1 to be included in tax return. Sophisticated vehicle used in passing wealth to heirs.
DCF Fees
Annual fee of one-half percent (.5%) of fair market value calculated monthly. Does not affect payment to beneficiary. If Foundation is Trustee, annual fee is one-half percent (.5%) of fair market value up to $1,000,000; one-quarter percent (.25%) on the next $4,000,000 and one-tenth percent (.1%) of amounts over $5,000,000. If Foundation is Trustee, annual fee is one-half percent (.5%) of fair market value up to $1,000,000; one-quarter percent (.25%) on the next $4,000,000 and one-tenth percent (.1%) of amounts over $5,000,000. If Foundation is Trustee, annual fee is one-half percent (.5%) of fair market value up to $1,000,000; one-quarter percent (.25%) on the next $4,000,000 and one-tenth percent (.1%) of amounts over $5,000,000.

 

Share this:

  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • Email

Like this:

Like Loading...

Giving through the DCF

Since 1986, the Delaware Community Foundation has worked closely with clients to help them achieve their charitable goals. Learn how you might benefit from working with the DCF:

  • Types of Gifts
  • Donor Advised Fund vs. Private Foundation
  • FAQs
  • Fee Schedule
  • Charitable Partners Program
  • Investment Management & Financials
  • DCF Board of Directors & Staff
Delaware Community Foundation
Copyright © 2019 All Rights Reserved
Proudly powered by WordPress
Built and Designed by 38solutions
loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.
%d bloggers like this: