Charitable Gift Annuity
An annuity is a guaranteed transfer of a fixed sum of money each year for a fixed number of years or for a period of an individual's life.
What questions should I consider if I am thinking about an annuity?
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Do I want a guaranteed income at a fixed rate and at a higher rate of interest than I am now receiving from my CD?
- Do I want to make a gift and receive an income for myself and/or my spouse as long as either of us lives, regardless of our health?
- Do I want to save on current income tax, capital gains, tax on interest; avoid tax on the estate and have a tax deduction for the year?
What are the benefits of a Charitable Gift Annuity?
- Guaranteed fixed income on one or two lives,
- Part of your annuity payment is tax-free
- You receive a tax deduction in the year your annuity is funded,
- As a non-profit, the Sisters of Saint Benedict pay a higher rate than you receive from a for-profit corporation,
- There is no estate tax on the annuity at your death,
- You help Mount Saint Benedict Monastery,
- You pay no legal fees or administrative costs,
- A one-page agreement creates a life-long contract,
- The annuity is not only a gift but also an investment, and
- A deferred payment is available to younger people.
If you are interested in more information about making a Charitable Gift Annuity, please contact Mount Saint Benedict Foundation, 629 Summit Ave., Crookston, MN 56716-2799, or email Foundation director.
Charitable Remainder Trust
The purpose of a trust in to set aside money or other assets to provide an income for yourself or another person. Charitable trusts have the additional advantage of establishing a tax-deductible gift for qualified nonprofit organizations.
Why establish a Charitable Remainder Trust?
- To create a cash return to you and your family,
- To benefit one or more of your favorite charities,
- To receive a charitable deduction,
- To reduce or omit capital gains taxes,
- To remove this portion from estate taxes,
- To give it away and remain a trustee, and
- To provide a unique and orderly arrangement for the management of donated assets.
Main differences between Unitrusts and Annuity Trusts
Unitrust
Irrevocable trust where once a year the trust's assets are valued at fair market.
One or more individuals receive an amount determined on any of these choices:
- an amount equal to a fixed percentage of the value of the trust (trust valued annually),
- an amount equal to a fixed percentage, or the trust's net income, whichever is less,
- the same as "2" but with a "make up" provision. If in any year there is a shortfall of insufficient income earned, this shortfall will be made up.
Additional gifts may be added to the unitrust in the future.
NOTE:With the 1997 Tax Relief Act, no one charity can receive less than 10% of the trust.
Annuity Trust
- Irrevocable trust that provides for one or more individuals to receive a specified dollar amount annually from this trust.
- Fixed amount that does not change throughout the term of the trust.
- Annual payment ( which can be paid more than once a year) must equal or exceed five percent of the initial value of the trust assets.
- Trust must pay a specified dollar amount annually, whether or not there is sufficient income, i.e., it would withdraw funds from the principal when necessary.
- Payment of the annual amount may be made in installments but at least once a year.
If you are interested in more information about making a Charitable Trust to the Sisters of Saint Benedict, please contact Mount Saint Benedict Foundation, 629 Summit Ave., Crookston, MN 56716-2799, or email Foundation director.
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