Income Instruments

Effective estate planning can utilize one or several techniques to maximize the benefits for all concerned. Family goals and the nature of assets held determine the best techniques to use to reach desired objectives. Listed below are some of the major techniques and key features of each:

Charitable Remainder Annuity Trust

• Pays fixed dollar amount based on initial percentage calculation
• Best for those with lower risk tolerance for financial market fluctuations
• Generally funded with cash or securities?

Charitable Remainder Unitrust

• Pays fixed percentage times annual valuation
• Some risk in financial market fluctuations
• If trust principal grows, income payouts increase
• Generally funded with cash or securities but can also be funded with real property with some limitations

Retained Life Estate

• Title in home assigned to charity
• Live in home as long as you desire – maintain home
  
• Significant tax benefits

Charitable Gift Annuity

• Attractive for individuals in mid-70s or older
• Fixed income based strictly on age of income beneficiaries
• Significant tax benefits including some tax-free income

Retained Life Estate/Gift Annuity

• Combines benefits of both Retained life Estate and Gift Annuity instruments
• Donor receives annuity income stream on charitable interest in home for life whether or not living in home
• When donor moves out of home, calculated retained interest in home available in cash

Deferred Gift Annuity

• Gift annuity payout rate based on date payments start, not on age when annuity established
• Works well for those with fully funded retirement programs and current surplus income

Grantor Lead Trust

• Fixed income to charity for specific time period
• Significant tax benefits
• Principal returned to grantor at end of term
• Works especially well with tax-free assets

Family Lead Trust

• Fixed income to charity for specific time period
• Principal to family at end of term – most often tax-free
• Estate size reduced saving gift and estate taxes
• Works especially well with income property – no tax on appreciation