Charitable Remainder Annuity Trust

The annuity trust provides for payment of a fixed-dollar amount—annually or at more frequent intervals—to the designated beneficiary(ies).

The amount of the annuity must equal at least 5% of the initial fair-market value of the trust. At the death of the last beneficiary, the trust principal is distributed to UJA-Federation.

In addition to the income the donor will receive from the trust, the donor will also be entitled to a charitable income-tax deduction for the value of our remainder interest in the trust assets.

Gift Range: $100,000 or more

Example: Bill and Carol Brown purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. They are both 75, and they would like to increase their retirement income. To do this, they transfer the stock to a charitable remainder annuity trust with a 5% payout rate.

In the first year, they will receive a $5,000 payment—over three times the dividends they have been receiving—and they will continue to receive $5,000 each year for the rest of their lives. Moreover, they avoid tax on their profit in the stock and receive an income-tax deduction of about $49,161. In their 24% tax bracket, this saves them $11,799 in income taxes (24% of $49,161).

When the last beneficiary dies, the annuity trust assets will benefit UJA-Federation.

Want to see a diagram about how charitable remainder annuity trusts work? View the diagram of this gift

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