Wills, Trusts, and Annuities

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

5.3%

5%

5%

First year income

$5,800(fixed)

(fixed)

$5,000(variable)

Tax-free income

$3,503

(variable)

(variable)

Ordinary income

$1,797

(variable)

(variable)

Charitable deduction*

$25,068

$29,426

$39,696

*These examples are based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.


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For more information

Email us, complete the personal illustration form, or contact the charitable estate planning representative in your area so that we can assist you through every step of the process.

Have Questions?

Contact your Charitable Estate Planning Representative to discuss your options.


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