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
5.8%
5%
5%
First year income
$5,800(fixed)
$5,000(fixed)
$5,000(variable)
Tax-free income
$3,033
-0-
-0-
Ordinary income
$2,767
$5,000
$5,000
Charitable deduction*
$35,119
$44,068
$44,939
*These examples are based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.
For more information
Email us, complete the personal illustration form, or call us at (203) 284-2838 so that we can assist you through every step of the process.
