Donors may make gifts to the church and arrange to receive income back for life or a period of years. Two of the most popular gifts are:
- Charitable Gift Annuities
- Charitable Remainder Trusts
Charitable Gift Annuities
A charitable gift annuity consists of two elements: (1) an outright charitable gift, and (2) an agreement for a fixed income annuity. Income payments can begin immediately or can be deferred for a period determined by the donor. The payment period can be measured by one life (typically the donor) or by two lives (usually husband and wife). Because the higher the donor’s age the higher the payout rate, these plans are particularly attractive to older donors.
Charitable Remainder Trusts
These plans can be very useful to donors when property contributed is subject to capital gains tax. Examples are stock, real estate, and business interests. Capital gains tax is generally avoided, and income is paid to the donor (and spouse, if desired) for the rest of his or her life. In some cases, donors decide to continue payment to heirs for a period of time, as well.
To create a charitable reminder trust, set up a trust and transfer the property you want to donate to it. The church often serves as trustee and manages or invests the property so it will produce income for you. The trust then pays you (or someone you name) a portion of the income generated by the trust property for a specified number of years, or for your whole life. You specify the payment period in the trust document. Then, at your passing or the end of the period you set, the remaining property goes to the church for the purpose you select.