Life Income Gifts

As we get older, it is normal to think about the kind of legacy we would like to leave behind after we are gone. This is often when we begin to work with a planned giving professional to determine the charitable organizations to support beyond our lifetime that reflect our core values and help us fulfill that legacy.

There are multiple types of Life Income Gifts, which work the same way with assets being transferred to a charity or trust to ultimately benefit a charitable organization. The charity invests the asset that produces income, which is paid to the donor or spouse (or another person). The asset’s income will be paid to the donor for the rest of their lives (or a designated number of years), with the remainder going to the charitable organization upon the death of the donor or his/her beneficiaries.

Life Income Gifts are also known as split-interest agreements because both the donor and the charitable beneficiary have a vested interest in the asset. They can be structured in a variety of ways to meet an individual’s philanthropic and financial goals. Choosing the best option requires careful planning with your professional advisor.

The most common types of income gifts are:

A pooled income fund is a unique charitable fund that allows a donor to combine their gift with others to gain high professional investment management in a diversified portfolio selected to minimize risk. The donor receives income for life, based on the pooled funds’ assets and share of the fund and a one-time charitable tax deduction. Upon the death of the beneficiary(s), the donor’s share of the pooled income fund is transferred to the designated parish or Episcopal charity.

Click on the following links for additional information:

• Episcopal Church Foundation: Pooled Income
• Fidelity Charitable: Pooled Income

Charitable Gift Annuity (CGA):

A Charitable Gift Annuity is a popular life income gift for individuals looking for guaranteed income for life. A gift annuity is a contract between the donor and a charitable organization through which the donor makes a sizable gift to a charity and in return, receives a fixed stream of income from the charity for the remainder of their life. In addition to fixed income, the donor also becomes eligible for tax dedication for the donation. At the end of the donor’s life, the remainder value goes to the charitable organization.

Click on the following links for additional information:

• Episcopal Church Foundation: Charitable Gift Annuity
• Fidelity Charitable: Charitable Gift Annuity

A Charitable Remainder Annuity Trust is a trust in which a donor transfers some assets to fund a trust administered by a charitable organization. The trust distributes fixed annuity payments to the donor each year, and the donor receives charitable deductions for the donation, but additional contributions are not allowed. Once the term of the trust ends the remaining funds are disbursed to the charitable organization

Click on the following links for additional information:

• Episcopal Church Foundation: Charitable Remainder Annuity Trust
• Fidelity Charitable: Charitable Remainder Annuity Trust

A Charitable Remainder Unitrust is similar to a Charitable Remainder Annuity Trust. The distinction between an Annuity Trust is that this type of trust distributes a fixed percentage based on the balance of the trust assets. The donor can make additional contributions. Similarly to an Annuity Trust, the donor receives charitable dedication for the donations, and once the term of the trust ends, the remaining funds are disbursed to the specified charitable organization.

Click on the following links for additional information:

• Episcopal Church Foundation: Charitable Remainder Unitrust
• Fidelity Charitable: Charitable Remainder Unitrust