Investing with Faith / Jolinda Moore

Life income gifts can provide income, support Church’s mission

“It is more blessed to give than to receive” (Acts 20:35). While these words, attributed to Christ, are certainly true, there are times in which we need to consider how to use our resources to provide for our own future needs as well as the needs of those closest to us. But those very legitimate concerns don’t need to keep us from supporting the charitable initiatives we care about.

Life income gifts serve a dual purpose by providing an income stream for individuals and their families while at the same time lending much-needed support to the Church’s mission.

In essence, a life income gift is a plan for both giving and receiving. There are three types of life income gifts:

• Charitable remainder annuity trust
• Charitable remainder unitrust
• Charitable gift annuity

All three of these plans provide income payments to you or your designated beneficiaries. They differ, however, in the amount or nature of those payments, the allowable charitable tax deductions, the type of property that can be given, and their resulting tax and other financial consequences. 

A charitable remainder annuity trust, for example, can provide you with an income for life, and then distribute whatever remains to one or more qualified charitable organizations. Your decisions guide how it works. After transferring property to the trust, you choose the annual payment amount based on specific guidelines. You name the income beneficiaries.

Often, a donor will arrange to receive benefits, followed by the donor’s spouse or other family member. You decide how long the income will be paid—for the life of one or more beneficiaries, or for a specified period up to 20 years. You name the trustee, a bank, attorney, family member or other qualified person or institution. 

A charitable remainder unitrust is similar, but differs in two important ways. First, you can make additions to a unitrust, but not to an annuity trust. And second, unitrust income payments vary with the value of the trust, whereas and annuity trust provides fixed payments. 

With a charitable gift annuity, you transfer property (most often cash) to a charity in exchange for a commitment to pay a specified amount to one or two beneficiaries for life. The annuity amount is based on the age of the beneficiaries, a predetermined interest rate and the amount of the gift. Under a charitable gift annuity, payments can be deferred, for example, until retirement age.

Your long-term goals will help you determine if a life income gift may be right for you. Giving is its own reward, especially when you know that you don’t have to choose between supporting the charitable efforts so many rely on and providing for your own needs. Such an opportunity can give you the assurance you need to share your blessings even more freely.

Want to learn more about life income gifts? You don’t have to figure it all out on your own. Our staff at the archdiocesan Catholic Community Foundation is always happy to help you explore which options are best for you to discuss with your tax advisor.
 

(Jolinda Moore is executive director of the archdiocesan Office of Stewardship and Development and the Catholic Community Foundation [CCF]. Tax or legal information provided herein is not intended as tax or legal advice. Always consult with your legal, tax or financial advisors before implementing any gift plan. If you would like to learn more about including your parish in your estate plans, please contact us any time. We exist to exclusively serve you and your parish in planned giving. For more information on the CCF, visit www.archindy.org/CCF, e-mail ccf@ archindy.org, or call 317-236-1482.) †