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A Life Income Gift is a highly effective way to contribute assets to Friendship Circle, while allowing you to keep an income for yourself and others for the remainder of your life, their lives, or a fixed term of years. To create a Life Income Gift, you may make an irrevocable gift of cash, securities, or real estate to the Friendship Circle, and in return, receive an income (fixed or variable, depending on the option you choose). After your lifetime and/or the lifetime(s) of other designated beneficiaries, the remaining balance of your gift would be used to support the Friendship Circle. Your age, assets, and income objectives will help you determine the best type of Life Income Gift. A fixed income option would be a Charitable Remainder Annuity Trust (CRAT), while a variable income option is the Charitable Remainder Unitrust (CRUT). Charitable Remainder Annuity Trust (CRAT)A CRAT allow you to secure a steady stream of income and reduce your taxes while helping to support the Friendship Circle. To create a CRAT, you place assets into an irrevocable trust and name the trustee (for example, the Friendship Circle, or a bank trust department). The trustee invests the assets (which can grow tax-free) and pays a fixed dollar amount to the trust beneficiaries (yourself, your spouse, your children or whomever you designate) for life of for a set term of years. When the last income beneficiary passes or the trust’s term ends, the trust dissolves, and the remaining assets are distributed to the charitable beneficiary. This option may be right for you if you are concerned about meeting your current financial needs. Charitable Gift Remainder Unitrust (CRUT)A CRUT works the same way as the CRAT, with this main distinction: the income distributed is not a fixed amount. Instead, with a CRUT, you or your family receive a lifetime or term income that is a percentage (by law, a minimum of 5 percent) of your trust’s assets valued annually. Income payments increase or decrease with the changing value of the trust. The unitrust provides a potential hedge against inflation as income payments may rise over time. In addition, the unitrust can be structured to defer income and maximize growth (for retirement planning, for example) or to handle specific types of assets. Another benefit to both the CRAT and CRUT is that no capital gain should be recognized by you upon contribution of appreciated property to the trust. Furthermore, you would be able to diversify your holdings within the trust without triggering capital gain |
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