For donors who are both charitably inclined and looking to accomplish significant tax planning, a specialized trust generates a significant income or gift tax deduction that can be used to either offset a high-tax year or pass a large amount of assets onto heirs without them being taxed.

When people think of a charitable donation, what usually comes to mind is giving something away — money or other property — and receiving no tangible benefits in return.

Some gifts provide the donor something tangible in return. For nearly 180 years, Americans have been supporting charities through a gift arrangement that grants lifetime income to the donor in exchange for the gift, called a charitable gift annuity (CGA). A similar type of gift is the charitable remainder trust (CRT).

More information about CGA

Gifts that Give Back

At the heart of these types of gifts is a balance between current lifetime needs and future charitable needs, with the donor enjoying the near-term benefits succeeded by the charity putting the donated assets to work. They can be thought of as gifts where the donor gives the assets but keeps the income.

What happens at the end of a CGA or CRT?

At the end of the income term, the remainder value of the CGA or CRT becomes available for whatever charitable use was designated by the donor. Thus, it is important to consider that if a scholarship or particular program is selected, the funds will not be available to it until many years in the future. Still, to particular donors, CGAs and CRTs represent an ideal balance of meeting income needs now while securing a significant charitable gift later.

To learn more about, or get a confidential illustration of, income-producing gifts, please contact us.

*As of Jan. 1, 2024

* As of Jan. 1, 2024