A charitable remainder annuity trust is a separate tax-exempt trust governed by an irrevocable agreement that pays you, and others named by you, a fixed amount for life or for a term of up to 20 years.
Is a charitable remainder annuity trust right for you?
Here are some simple qustions to help you decide:
- Are you considering a gift amount of $25,000 or more?
- Do you want to maintain or increase your income?
- Do you want the security of predictable income for life or a number of years?
- Do you want to save on income taxes or capital gains taxes?
- Do you want to choose the person who administers your gift and guides its investments?
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Example
Anna, age 84, has various appreciated stocks in her brokerage account with a combined value of $500,000. The stocks cost $200,000 to purchase and provide her with approximately $10,000 in annual dividend income. Anna would like to increase her cash flow – without having to worry about market fluctuations – and arrange for a gift to Rochester Regional Health through her estate.
Anna finds that creating a charitable remainder annuity trust will achieve her goals nicely. She transfers her $500,000 in stock to an annuity trust with a 5.0% payout rate.