Gifts That Provide Income

Trusts and annuities are great tools for estate planning, ensuring fixed income, passing on assets or reducing tax burden. The information below is provided solely for your information. It is always best to discuss with your financial advisor if an annuity is the most appropriate vehicle to meet your individualized financial goals. The JCCSF can also refer you to qualified financial advisors who can answer questions for you.

Charitable Gift Annuity

Establishing a Charitable Gift Annuity (CGA) allows you to make a gift of cash or property to the JCCSF in exchange for fixed annuity payments to yourself or a loved one. CGAs simultaneously provide a charitable donation, an income tax deduction and a guaranteed lifetime income stream.

A charitable gift annuity (CGA) is an excellent way to increase your income, reduce your taxes and make a generous future gift to the JCCSF at the same time.

This is how it works:

You make an irrevocable transfer of cash or marketable securities to the JCCSF. In exchange, the JCCSF agrees to make fixed payments to you or others for life. A portion of this income will be tax-free over your life expectancy and you will receive a partial income tax deduction for your gift. In addition, the assets transferred in exchange for your CGA will be considered outside your estate for federal and state estate tax purposes.

It is also possible to establish a gift annuity now, but delay receiving payments until a later date that you determine. Called a Deferred Gift Annuity (DGA), this life income gift provides a higher payment and can be an effective way of securing supplemental income during retirement.

CGAs can be structured to meet the needs of you or a loved one. They can be structured to provide supplement retirement income, care for an aging parent or provide for a grandchild's education.

The tax deduction is limited to the amount contributed to the annuity in excess of its present value, as calculated using IRS parameters.

Charitable Remainder Trust

Charitable Remainder Trusts (CRTs) can reduce your individual taxable income by first dispersing income to the beneficiaries of the trust for a specified period of time. Once this time frame expires, the remainder of the assets is donated to the JCCSF. CRTs can be a way to earn income from a highly appreciated asset and reduce capital gains tax.

A Charitable Remainder Trust (CRT) is a life income arrangement that enables you to convert an asset, usually appreciated stock or real estate, into an income stream by making an irrevocable gift of the property.

Once transferred into the CRT, these appreciated assets can be sold tax-free and are reinvested into a diversified portfolio. As a result, you have the full fair market value of the gifted property available to produce life income for you.

In addition, your gift will generate a charitable income tax deduction equal to the present value of your future gift. In the year of your gift, this deduction can be taken up to 30 percent of your adjusted gross income. Any unused portion of this deduction can be carried forward and deducted from your income in the same percentage for an additional five years.

Charitable Lead Trust

Charitable Lead Trusts (CLTs) are the opposite of charitable remainder trusts. Income is paid annually to JCCSF for an established period of time and then the assets used to fund the gift revert to you or your heirs. CLTs are not for everyone, but for some they provide an excellent tool for estate planning. Consult your financial planner for advice and more information.

A Charitable Lead Trust (CLT) can be used to transfer assets to children or others at a significantly reduced tax liability.

The trust makes a fixed payment to the JCCSF for a specified term, measured either by someone's life or a selected number of years. After the trust term ends, the assets of the trust are either returned to you or passed on to children or other loved ones. If the assets are to be returned to you, you receive an income tax deduction when the trust is created. If the assets are passed on to heirs, applicable estate or gift taxes on the value of the gift are reduced or completely eliminated. The tax savings from a charitable lead trust may allow you to provide significant support for the JCCSF at little or no cost to heirs in terms of ultimate inheritance.

A CLT can be a powerful tool in gift and estate tax planning, but the technical complexities require careful consideration. The JCCSF is glad to work with you and your financial advisors to see if a charitable lead trust is right for you.