Income-Bearing Life Gifts
Certain gifts not only accomplish a charitable goal by supporting Westminster Choir College, but also provide fixed payments to you during your lifetime. Additionally, a life income gift provides you with an income tax charitable deduction in the year your gift is made. Such gifts may be of interest to you if you wish to make a substantial gift to Westminster Choir College but feel you cannot afford to forfeit the annual income produced by the asset. Our planned giving program offers several ways, such as charitable gift annuities and charitable remainder trusts, to help you make a gift while receiving payments for your life.The benefits vary, but all of these life-income arrangements have the following attractive features:
- Income for life paid to you and/or another beneficiary, such as a spouse or another family member,
- A federal income tax deduction for a portion of the gift in the year your gift is made,
- Elimination or reduction of capital gains tax if the gift is in the form of securities or real estate that has appreciated value.
Find the gift that’s right for you:
Charitable Gift Annuities
A charitable gift annuity is a contractual agreement between you and Westminster. In exchange for an irrevocable gift to Rider, the University agrees to pay you and a second person if desired a fixed annual income (quarterly payments) based on your age for your lifetime. An annuity is part gift and part investment. For the year in which you make the gift, you are entitled to an income tax charitable deduction for the gift portion of the annuity. The deduction is based on the size of your contribution, the annuity payment rate and the age(s) of the income beneficiary(ies). Westminster Choir College of Rider University administers annuities at no cost to you.
Annuities are typically funded with gifts of cash or appreciated securities. The minimum amount needed to establish a gift annuity is $10,000. Income beneficiaries must be at least 40 years old. The American Council of Gift Annuities recommends the rates that Westminster Choir College of Rider University offers. Gift annuity rates are determined by the age of the person or person who receives the payment.
Deferred Gift Annuities
Instead of receiving immediate quarterly annuity payments, you may defer payments until a later date, such as your anticipated date of retirement. The contribution when made secures a current income tax charitable deduction, and Westminster Choir College of Rider University agrees to pay a guaranteed life income starting at a set date in the future. Due to the deferral of payments, you will receive higher income payments and a higher immediate income tax deduction.
Charitable Remainder Trusts
There are two types of charitable remainder trusts that provide ways of giving assets to Westminster Choir College while retaining an income for life—unitrusts and annuity trusts. Assets are transferred to the trust, and you (and another beneficiary, if you wish) retain an income for life. You may fund a trust with appreciated assets and receive favorable reductions or elimination of capital gains tax. We advise you to speak with your tax attorney or financial planner to determine the benefits to you. A minimum gift of $50,000 is needed to establish a trust.
A charitable remainder unitrust pays you a percentage of the fair market value of the trust assets, as revalued annually. Your annual payment will vary as the value of the trust changes. When you establish the trust, you choose the pay-out rate, which must be at least five percent. A high rate, however, inhibits growth of principal and reduces the charitable deduction. An important feature of the unitrust is that you may make additions to the trust at future times.
A charitable remainder annuity trust pays a fixed amount each year as determined in advance by you. The amount must be at least five percent of the market value of the assets at the time the trust is established. As with the unitrust, a high payout rate reduces the charitable deduction. The chief advantage of an annuity trust is that it provides you with a predictable income each year, regardless of any fluctuation in the earnings or value of the portfolio.
Charitable Lead Trust
The charitable lead trust is a gift arrangement that is the reverse of a life income gift. A charitable lead trust pays income to Westminster for a specified number of years, and when the trust terminates, the remainder transfers to the donor or another beneficiary. If the donor is the owner of the trust (grantor lead trust), the donor accelerates income tax deductions for future years into the year in which the gift is made. If the donor is not the owner of the trust (non-grantor lead trust), the donor's tax benefit will be a reduction of gift and estate taxes that would otherwise apply to property passed to heirs.