How do I establish a life income gift?

Charitable Gift Annuity | Charitable Remainder Trust
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Family obligations and the need to provide for retirement, coupled with the high cost of living, make it difficult for many people to consider substantial charitable gifts now. But there is a way to have the satisfaction of making a meaningful lifetime gift without sacrifice. In fact, you can get current income tax and financial benefits. It is called a life income gift. You irrevocably transfer some assets to the Red Cross now, and in return, you (and a survivor, if you wish) receive income for life. As a result, the assets are used to carry out our mission.

By making a life income gift to the Red Cross, you will receive the following benefits, in addition to the pleasure of knowing the good work your gift will do. The benefits include:

• A charitable deduction in the year you make the gift for the present value of our right to eventually receive the assets.
• You free up appreciated investment to maximize yield, diversify, or both--often without paying tax on the capital gain.
• Your effective yield is increased by substantial income tax savings. · Income can be taxed more favorably in some plans.
• You unburden yourself of investment concerns.
• Your probate and estate administration costs may be reduced.

What are examples of life income plans?

Charitable Gift Annuity

In exchange for your gift of cash or marketable securities to the American Red Cross, we agree to pay you (and another annuitant) a fixed amount annually for your lifetime. The transfer is part gift and part purchase of an annuity. The rate of return is attractive and the payments are guaranteed for life. The Red Cross uses the charitable gift annuity rates recommended by the American Council on Gift Annuities. The rates are different for an annuity for two lives. The rates for two lives are less than rates for one life because the period of payment may be longer.

If you wish, you may defer charitable gift annuity. You can make the gift now, and the Red Cross will pay you (and another beneficiary, if you wish) life income starting at any date you specify. This is a great option if you are concerned about retirement income. Also, you receive the income tax deduction in the year you make the gift. The amount you receive each year depends on the amount transferred, your age now, and your age when the payments are to start. For more information, see our charitable gift annuity story.

Charitable Remainder Trust

This life income plan is created by transferring assets to a trust that pays you (and another beneficiary, if you wish) income for life. At the end of the trust, the remaining trust assets are transferred to the Red Cross. A bank or trusted advisor can serve as trustee. A charitable remainder trust can be either an annuity trust or a unitrust.

The type of charitable remainder trust you choose determines your annual payments:

Charitable Remainder Annuity Trust

The charitable remainder annuity trust pays you a fixed dollar amount annually for life. The fixed payments are determined by the payout percentage selected at the beginning of the trust. You can claim a charitable deduction on your income tax form the year that you create the trust. The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.

Charitable Remainder Unitrust

The charitable remainder unitrust pays you a fixed percentage of the fair market value of the trust assets, as revalued each year. Like the annuity trust, you can claim a charitable deduction on your income tax form the year that you create the trust. The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.

For more information, see our charitable remainder trust story.

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