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Charitable Remainder Annuity Trust
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Charitable
Bequest
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Charitable Lead Trust
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Charitable Remainder Unitrust
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Charitable Gift Annuity
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Donor-advised Fund
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Direct Donation
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Description
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Donor and/or other beneficiaries receive payments of a fixed amount determined when the trust is established. No additional gifts to the Trust are allowed
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As a part of a will, a charitable bequest specifies a particular asset, or fixed dollar amount, or percentage of estate, be given to a charitable organization upon donor’s death
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Assets are placed in trust, charity receives payment, property is eventually returned to the donor, donor’s descendants or other non-charitable beneficiary
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Donor and/or other beneficiaries receive a fixed percentage of the value of the trust’s assets valued annually. The charity receives remainder of trust at income beneficiary’s death or trust termination
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In exchange for assets, a charity guarantees to pay a specified life income payment to beneficiaries. The charity receives the remainder at death of the beneficiaries. No additional gifts are allowed
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Public charity that pools donations with other donors” gifts and invest them; fund makes grants to charitable recipients upon recommendation of donor
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Cash or property donated to a public charity or community foundation
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Advantages
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* Portion of contribution deductible in current year
* Annual income for donor or other non-charitable beneficiary
* The charity receives remaining assets at income beneficiary death or trust termination
*Fixed income each year
* Can be for lifetime or for term of years not to exceed 20 years
* Trust is normally tax-exempt
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*Simple part of a will
*Revocable at any time
*Gives donors access to assets until death
*Unlimited tax deduction for the estate
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*Assets may be passed on to heirs
*Generates income for charity during donor’s lifetime or over a specified number of years
*Can provide gift, estate and generation-skipping tax advantages
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*A portion of contribution deductible in current year
*Income for the donor or other non-charitable beneficiary
*Charity receives remaining assets at income beneficiary’s death or trust termination
*Trust is normally tax-exempt
*Can be for lifetime or term of years, not to exceed 20 years
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*Fixed amount of income provided each year for life
*part of income is a tax-free return of principal
*The charity receives the remaining assets at income beneficiary’s death
*A portion of contribution deductible in current year
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*Contribution usually fully deductible each year
*Account can be named
*Flexible giving in future years
*Can give anonymously
*Fees and expenses are low
*Consolidated charitable giving
*Can establish legacy with successors to account
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*Immediate benefit to charity
*No associated costs
*Current income tax deduction normally allowed
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Disadvantages
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* Deduction is subject to AGI restrictions
* Income to income beneficiary is generally taxable
* Must have individual or institutional trustees
* Cannot accept additional donations
* More complex establish and fees are generally higher than some alternatives
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*No immediate tax benefit
*Bequest must be paid from estate
*Probate adds costs, delays, and complexity
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*Tax treatment is complex
*More complex to establish and fees are generally higher than some alternatives
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*Deduction is subject to AGI restrictions
*Income to income beneficiary is generally taxable
*More complex to establish and fees are generally higher than some alternatives
*Must have individual or institutional trustees
*Some CRT’s cannot accept future donations
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*Charity liability for annuity: if the charity has financial difficulties, the income beneficiary may not receive income
*Deduction is subject to AGI restrictions
*Transfer of long-term appreciated assets gives rise to tax liability to donor
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*Deduction is subject to AGI restrictions
*Charity’s trustees have final authority over grants
*Slightly less flexible that a trust or private foundation
*Donor receives no income from assets
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*Donor needs to research and choose specific charities before year-end
*Deduction is subject to AGI restrictions
*Some charities are not equipped to accept securities
*Donor receives no income from assets
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General Tax Rules
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*Current income tax deduction for actuarially determined value of gift ultimately passing on to charity
* Estate tax liability reduced
* Avoid capital gains tax for gifts of long-term appreciated capital assets
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*Estate tax deduction for value of donation
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*Income tax benefits vary depending on type of trust
*Estate or gift tax liability may be reduced
*Avoid capital gains tax for gifts of long-term appreciated capital assets
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*Current income tax deduction for actuarially determined value of gift ultimately passing on to charity
*Estate tax liability reduced
*Avoid capitial gains tax for gifts of long-term appreciated capital assets
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*Current income tax deduction for actuarially determined value of gift ultimately passing to charity
*Estate tax liability reduced
*Reduce capital gains tax liability for gifts of long-term appreciated assets
*Annuity principal is returned to donor tax-free as portion of each annuity payment over term of the annuity
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*Income tax deduction for amount of cash donation up to 50% of AGI
*Generally, deduction for full market value of long-term property with no capital gains tax paid, up to 30% of AGI
*Estate tax liability reduced
*Avoid capital gains tax for gifts of long-term appreciated assets
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*Income tax deduction for amount of cash donation up to 50% of AGI
*Generally, deduction for full market value of long-term property with no capital gains tax paid, up to 30% of AGI
Estate tax liability reduced
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Donor Income
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Yes, Fixed |
Yes, until death when assets are given to charity
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No, original asset reverts back to remainder beneficiary, can be donor
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Yes, Variable
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Yes, Fixed
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No
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No
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