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Annuities

Life Income Gifts

A Life Income Gift is a highly effective way to contribute assets to Angels Foster Care, while allowing you to keep an income for yourself and others for the reminder of your life, their lives or a fixed term of years. To create a Life Income Gift, you make an irrevocable gift of cash, securities or real estate to Angels Foster Care, and in return, receive an income (fixed or variable, depending on the option you choose). After your lifetime and/or the lifetime(s) of other designated beneficiaries, the remaining balance of your gift would be used to support Angels Foster Care.

Your age, assets, and income objectives will help you determine the best type of Life Income Gift. A fixed income option would be a Charitable Remainder Annuity Trust (CRAT), while a variable income option is the Charitable Remainder Unitrust (CRUT).

Charitable Remainder Annuity Trust (CRAT)

A CRAT allows you to secure a steady stream of income and reduce your taxes while helping to support Angels Foster Care. To create a CRAT, you place assets into an irrevocable trust and name a trustee (for example, Angels Foster Care, or a bank trust department). The trustee invests the assets (which can grow tax-free) and pays a fixed dollar amount to the trust beneficiaries (yourself, your spouse, your children, or whomever you designate) for life or for a set term of years. When the last income beneficiary dies or the trust’s term ends, the trust dissolves, and the remaining assets are distributed to the charitable beneficiary.

This option may be the right one for you if you are concerned about meeting your current financial needs.The longer income stream is distributed to you and your family, the less of a taxable deduction you are entitled to. However, the deduction may be taken in the year the assets are transferred to the CRAT, and you need not wait until the assets are actually distributed to the charitable organization.

Charitable Remainder Unitrust (CRUT)

A CRUT works the same way as the CRAT, with this main distinction: the income distributed is not a fixed amount. Instead, with a CRUT, you or your family receive a lifetime or term income that is a percentage (by law, a minimum of 5 percent) of your trust’s assets valued annually. Income payments increase or decrease with the changing value of the trust.

The unitrust provides a potential hedge against inflation as income payments may rise over time. In addition, the unitrust can be structured to defer income and maximize growth (for retirement planning, for example) or to handle specific types of assets.

Another benefit to both the CRAT and CRUT is that no capital gain should be recognized by you upon contribution of appreciated property to the trust. Furthermore, you would be able to diversify your holdings within the trust without triggering capital gain.

Angels Foster Care would be pleased to work with you and your financial or tax advisor to establish the planned gift(s) that are most appropriate for you to achieve your financial planning goals. We are partnered with the Santa Barbara Foundation in the administration of our planned giving program. Please contact Meichelle Arntz, CEO of Angels Foster Care, at (805) 884-0012 or meichelle@angelssb.com for a confidential inquiry without obligation to you.