Which Life Income Plan Works Best for You
You may wonder which charitable vehicle that returns
income – a charitable gift annuity, a charitable remainder annuity
trust, or a charitable remainder unitrust, is right for you. Each gift
addresses particular financial goals, and you should choose the one
that is the best fit.
Like the annuity trust, the gift annuity pays you
fixed income. Because it is a simple obligation and not an individually
managed trust, we can often pay you a higher income rate on a gift
annuity than we can on an annuity trust. In addition, a gift annuity's
income payments come to you partially tax-free, and partially as capital-gains
income if you contributed appreciated assets. Unless your annuity trust
is invested in tax-free securities, your income will most likely be
taxable.
The annuity trust also offers management flexibility,
multiple beneficiaries and existence for a term of years rather than
the beneficiaries' lifetime.
The unitrust is even more flexible. It’s
benefits are similar to that of the an annuity trust; however its payout
structure allows for income growth over time. We can show you how a
unitrust paying 5% income will eventually outperform an annuity trust
paying 6 or 7%.
The following chart compares the income and tax
benefits from these three gifts:
Husband and Wife, 70 and 68
Asset contributed: $100,000 cash
|
|
Charitable
Gift Annuity |
Annuity
Trust |
Unitrust |
Income
rate |
5.8% |
5% |
5% |
First
year income |
$5,800(fixed) |
$5,000(fixed) |
$5,000(variable) |
Tax-free
income |
$3,033 |
-0- |
-0- |
Ordinary
income |
$2,767 |
$5,000 |
$5,000 |
Charitable
deduction* |
$35,119 |
$44,068 |
$44,939 |
*These examples are based on a factor that changes
monthly. Contact our office for a personal illustration based on the
latest rates.
For more information
Email
us, complete the personal illustration form,
or call us at 860.486.6135 so that we can assist you
through every step of the process.
Hal C. Reed, JD, CFRE
Assistant Vice President for Planned Giving
The University of Connecticut Foundation, Inc.
Storrs, CT 06269-3206
Telephone: 860.486.6135
Toll-free: 800.269.9965, Extension 6135
Facsimile: 860.486.1615
E-Mail: hreed@foundation.uconn.edu
|
