Charitable Retirement Plan

Charitable Retirement Plan is one of the most important plans you can make for your future. By incorporating a charitable gift into that plan, you not only accumulate future income, you also ease the tax burden on current income. The following are two ways to structure a charitable gift that pays income to you following your retirement.

A deferred payment gift annuity is similar to a charitable gift annuity. You make a gift directly to an organization, which then guarantees you a fixed income based on a percentage of your gift. However, income payments are deferred until a future date, usually when you expect to retire. Because of this postponement, the payment to you is much higher than the payment for a gift annuity offering immediate income. The current income tax deduction is also much higher. In addition, part of the principal used to make your gift eventually will be returned to you in the form of income payments, so part of your income will be tax-free.

Benefits of a deferred payment gift annuity:

• Simplicity
• Reasonable cost
• Higher guaranteed, fixed income that current gift annuity
• Payments guaranteed by our organization
• Generous current income tax charitable deduction
• Partly tax-free income
• Reduction of penalty capital gains tax on the sale of appreciated assets

Retirement Unitrust

Retirement Unitrust is designed for you to build retirement income while saving taxes through the use of a charitable retirement unitrust. A typical plan uses a “net income-plus makeup” unitrust, and one of its most appealing features is its flexibility. You select the trustee and the amount of retirement income you will receive, and you are free to add to the fund, increasing its value when you retire.

For example, you establish a charitable retirement unitrust 10-15 years before you retire. While you are still working, you continue to add to the trust assets, but you also receive a modest income from those assets. You may return this income to the unitrust if you wish, helping it grow and saving of federal income tax. If you create the unitrust with highly appreciated assets that provide low income, they can be sold and invested for maximum growth, and you pay no capital gains tax. After you retire, the unitrust assets are invested to yield the maximum income to you and your spouse. Your trustee can use the “makeup” provision to make up any shortfall in your income payments from earlier years.

Benefits of a retirement unitrust:

• Current income tax deduction
• Maximum retirement income
• Bypass of the penalty capital gains tax on the sale of appreciated assets

This plan provides maximum retirement income for the rest of your life and that of your spouse. After both donor and spouse die, the remainder of the trust passes to our organization.

Wealth Replacement Trust

Wealth Replacement Trust is designed to perform exactly as its name implies – replace wealth. Because it transfers property free of federal estate tax and state inheritance tax, it often provides an even greater inheritance for your heirs than a direct bequest. A wealth replacement trust consists of an insurance policy. When you make a major gift, you may realize a substantial savings through an income tax deduction. Additionally, you may obtain increased income from appreciated assets.

With this savings, you can purchase an insurance policy with a stated value equal to the value of the gift. You name the trustee as owner of the policy, while the final beneficiary of the policy would be your children or other heirs.