Gift Planning - Income Gifts

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Charitable Gift Annuity

Gifts That Pay You Income
There’s a way for you to support Faith in Action and feel confident that you have dependable income in your retirement years. You can do this with a charitable gift annuity.

With a charitable gift annuity, you agree to make a gift to Faith in Action and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life. The balance is used to support our work.

This type of donation can provide you with regular payments for life and allow us to further our mission. You can also qualify for a variety of tax benefits depending on how you fund your gift.

If you fund your gift annuity with cash or appreciated property, you qualify for a federal income tax deduction if you itemize. In addition, you can minimize capital gains taxes when you fund your gift with appreciated property.

And now, you can fund your gift using your IRA assets. If you are 70½ and older, you can make a one-time election of up to $53,000 to fund a gift annuity. While your gift does not qualify for an income tax deduction, it does escape income tax liability on the transfer and count toward all or part of your required minimum distributions.

Charitable Remainder Trust

Strategies for Significant Contributions
If you’ve amassed substantial assets and seek reliable income, a charitable remainder trust could be an ideal solution. This trust structure offers you or designated beneficiaries annual income for life or up to 20 years from assets contributed to the trust you establish. Upon conclusion of the trust term, the remaining balance is directed to Faith in Action.

Such contributions may yield tax advantages and provide income options. There are two payment methods available, each offering distinct benefits:

Annuity Trust: Provides you with a fixed dollar amount annually, chosen at the outset. Your payments remain constant regardless of fluctuations in trust investments.

Unitrust: Yields a variable annual payment based on a predetermined percentage of the fair market value of the trust assets. Payment amounts are reassessed yearly. If the trust’s value increases, your payments rise accordingly. Conversely, if the value decreases, your payments decrease as well.

Illustrative Scenario
Susan, aged 75, wishes to support Faith in Action while also securing additional future income. She establishes a charitable remainder unitrust, guaranteeing annual lifetime payments equal to 5% of the trust assets’ fair market value, reassessed annually. Susan endows the trust with assets valued at $500,000.

In the first year, Susan receives $25,000 from the trust, with subsequent payments varying annually based on the trust assets’ valuations. She qualifies for a federal income tax charitable deduction amounting to $290,360* upon creating and funding the trust. This deduction results in tax savings of $92,915, considering Susan’s 32% tax bracket.

*This calculation is based on a 5.2% charitable midterm federal rate. Deductions and outcomes may vary depending on individual circumstances.