Life Income Gifts

The Mount’s income-producing plans permit donors’ gifts to be invested to provide income for themselves or persons they designate. A life income plan may have either one or two individual beneficiaries. The income is paid for the life of each beneficiary or for a set period of years. Ultimately, the gift assets become available for use by Mount Saint Mary College for a purpose designated by the donor.

Life Income and Income-Producing Plans

Income-producing, or life income plans include gift annuities, charitable remainder trusts, and charitable lead trusts. A life income plan can be a good way to make substantial future gifts to the Mount after providing (and possibly increasing) income for the donor, the donor’s family, or designees for as long as it is needed.

Charitable trusts may be established with cash, securities, or with certain kinds of property. The percentage of a life income gift that is deductible for federal income tax purposes depends upon the age(s) of the income beneficiary(ies), the rate of return, the federal monthly discount rate, and the size of the particular gift.

Advantages:

  • Create a life income for yourself and/or someone else age 50 or older.
  • Claim a partial charitable income and an estate tax gift deduction for the value of the remainder interest in the trust.
  • Convert low-yield securities or other property to a form of investment that has a better yield.
  • Receive professional investment management of the assets.
  • The possibility of making a gift of long-term appreciated property without paying capital gains tax.

Annuities and Trusts

A gift annuity is a combination of a gift and an investment whereby, in exchange for a gift of cash or marketable securities, Mount Saint Mary College by contract guarantees to pay a fixed quarterly payment for life to no more than two beneficiaries designated by the donor. The annuity rates are based upon the ages of the beneficiaries. Each gift annuity is established separately and requires a gift of $10,000 or more.

 

Charitable Remainder Trusts that benefit Mount Saint Mary College contain assets with yields that create income for one or more individual beneficiaries. The assets are managed as individual accounts. If you wish to establish a charitable trust, you may do so during your lifetime or under your will. It is always appropriate for you to consult an attorney or financial adviser for personal advice when contemplating creation of a trust.

Unitrusts pay individual beneficiaries a fixed percentage of the market value of the entrusted assets as valued each year. The dollar amount will vary according to the performance of the trust. By law, the annual amount must be a minimum of the smaller of the trust income or 5% of the annual value of the trustee assets. Gift additions may be made to a unitrust after it is established. 

Annuity trusts pay individual beneficiaries a fixed dollar amount quarterly each year. By law the annual payment must be equal to 5% or more of the trust’s original assets. Additions to an annuity trust are not permitted.

All gift annuities and charitable remainder trusts that benefit Mount Saint Mary College are credited at the market value of the gift on the date of that gift.

 

A lead trust is a beneficial way for a donor to transfer assets to heirs after contributing substantially to Mount Saint Mary College. Assets in a lead trust can appreciate without creating any capital gains tax liability.

A lead trust provides a yearly gift from trust asset earnings to the Mount for a fixed number of years. When the trust’s term of years ends, its assets are distributed to the donor or the donor’s heirs. A lead trust is thus the opposite of a charitable remainder trust. 

An estate or gift tax deduction is allowable for the yearly income paid to Mount Saint Mary College. Because of this deduction and avoidance of the capital gains liability, it is sometimes possible for heirs to receive a larger estate after taxes than would have been possible without the trust. Campaign credit is given in the amount of the projected yearly payments to be made to Mount Saint Mary College during the term of a lead trust.