One method of making a gift with a retained right to income is a charitable remainder trust. Let's look at some of the benefits a charitable remainder trust can provide:

• An income for you and/or your beneficiaries for life or a period of up to 20 years
• An immediate and substantial income tax charitable deduction (subject to certain income limitations) for itemizers
• Potential avoidance of current capital gains taxes when the trust is funded with long-term appreciated property
• Reduction of your estate to avoid or reduce death taxes
• Substantial reduction of probate costs, taxes, and other estate transfer expenses.

An Immediate Charitable Deduction

A gift to a charitable remainder trust qualifies for an immediate income tax deduction, even though income is to be paid to the donor (and/or other beneficiaries) for life. The exact amount of the charitable deduction depends on the:

• Value of the property transferred to the trust
• Amount of income benefits that are payable each year to individual beneficiaries
• Approximate length of time the income benefits will be paid
• Interest rates prevailing at the time the gift is made

Despite the tax and financial benefits of a charitable remainder trust, you should consider this kind of arrangement only if you and your advisors determine it is compatible with your overall estate, tax, and financial plan.