Life Income Gifts
Did you know that you can make a gift to the Bob Mizer Foundation that will also guarantee a continuous stream of income for you and/or your loved ones? In fact, there are a variety of so called "income producing gifts" that may help you to:
- Create a supplemental source of retirement income;
- Provide a protected source of income for your spouse or other loved ones who survive you;
- Arrange funds to cover educational expenses for your children or grandchildren;
- Increase your income from low yielding stocks, certificates of deposit or other underperforming assets.
CHARITABLE REMAINDER TRUSTS
Trusts can be created to accomplish a wide range of goals. They allow a person to arrange for a property to be put first to one use and then to another. A charitable remainder trust (CRT) offers a way to make a meaningful legacy gift to the Bob Mizer Foundation while first providing income for yourself or others you name.
CRT's work like this:
- You, as the donor, create a trust with the assistance of an appropriate advisor.
- You transfer the cash or other property to the trust to be managed by a trustee. The trustee can be you, a bank/trust company or a charity.
- You receive an income tax deduction in the year you create the trust.
- The trustee manages the trust’s holdings for the beneficiaries. You or others you name are called the “income beneficiaries” and the Bob Mizer Foundation is the “charitable beneficiary.”
- Each year a distribution from the assets in the trust is paid to the income beneficiaries.
- Payments continue until the trust is “dissolved.” The trust document specifies when this is to occur, such as the death of the last beneficiary or after a stated period of time.
- When the trust is dissolved its assets are distributed to the Bob Mizer Foundation. This gift portion is known as the “charitable remainder.”
Charitable remainder trusts can be designed to pay either fixed, unchanging income or an income that will vary with the performance of the trust assets. The type most appropriate for you will of course depend upon your needs and circumstances. The Bob Mizer Foundation can help you determine which type of CRT will work best for you.
At no obligation or cost, the Bob Mizer Foundation will work with you and your professional advisors to determine which type of Charitable Remainder Trust will best address your particular needs. With our expertise and illustration capabilities, you will be equipped to make an informed decision as to whether and which charitable remainder trust strategy will be most appropriate for you and your circumstances.
CHARITABLE LEAD TRUSTS
Some individuals would like to see the Bob Mizer Foundation have use of their gift now, while also reserving benefits from the gift for family members to use later. Charitable Lead Trusts are essentially the opposite of charitable remainder trusts. In this arrangement, a donor contributes property irrevocably to a trust. The trustee pays an income to a charity such as the Bob Mizer Foundation for the donor’s lifetime or over a period of years. At the end of the term, the trust property is distributed back to the donor or to the donor’s heirs.
The primary estate planning advantage of charitable lead trusts is that the property contributed is valued for estate and gift tax purposes as of the date of contribution. This means that if you have an asset this is likely to appreciate substantially in value over time and from which you do not need the income - such as real estate – you may wish to remove it from your estate now by contributing it to a charitable lead trust. When your heirs receive it they will not have to pay gift or estate tax on the increase in value between the date of contribution and the date of distribution.
This type of gift plan can be complex but works very well in testamentary planning. Some individuals set up several charitable lead trusts varying the timing of distribution assets to loved ones. Reducing estate tax, timing the receipt of an inheritance, and providing for a charitable gift are just a few of the objectives that can be met through the use of a charitable lead trust.
CHARITABLE GIFT ANNUITIES
To create a life income gift does not require an extraordinary amount of wealth. With a gift of only $10,000 you can create a Charitable Gift Annuity. Here’s how it works:
- You transfer cash or other assets to the Bob Mizer Foundation to fund a gift annuity agreement.
- You’ll receive a fixed payment each year. The amount of your payment is a percentage of your gift, determined by your age when the gift agreement is arranged.
- You benefit from an immediate tax deduction. And, part of each annual payment you receive may be tax free for a number of years.
- You can also choose to name a second individual to receive payments with you for her lifetime. In a joint-life gift annuity, the payments and deductions are less since the annuity is spread over two lives.
- Whatever asset value remains from the original gift at the death of the annuitant(s) is the gift to the Bob Mizer Foundation.
Example: Joe, age 80, gives $10,000 cash to establish a gift annuity with the Bob Mizer Foundation. The payment rate at age 80 is 8.0% (Check with us for current rates and estimated tax savings before you give.) He will receive annuity income each year for life and a tax deduction in the year he gives.
Amount transferred to the Bob Mizer Foundation = $10,000
Annuity Rate = 8.0%
Annual payment to Joe for life = $800
Immediate income tax deduction = $4855
Many donors find it convenient to arrange a new gift annuity agreement each year. Since payment rates for older donors are higher than for younger ones, each new gift annuity generally brings larger annual payments.
