A charitable remainder annuity trust provides a fixed payment to you and/or your loved ones for life or for a specific number of years. The size of the payment is determined at the time the gift is made. Donors seeking a higher payout will receive a lower current tax deduction and vice versa (within certain limits). Seton establishes annuity trusts in amounts of $100,000 and greater.

If you are interested in making a gift that yields a fixed income, Seton’s Planned Giving Office can help you determine whether a charitable remainder annuity trust or a charitable gift annuity is a better fit for your particular situation. In general, a charitable remainder annuity trust may provide a more favorable tax treatment than a gift annuity if you are using highly appreciated assets.

When you establish an annuity trust, you receive an immediate income tax deduction for a portion of the gift, and, if needed, this deduction can be used over as many as six consecutive tax years. If your gift is funded with appreciated assets, you can also reduce your capital gains liability.

Example:

Mr. Smith owns appreciated securities that originally cost him $30,000 and are now worth $100,000. He donates these securities to Seton to fund a charitable remainder annuity trust, naming his wife, age 70, as the lifetime beneficiary. The trust agreement provides for annual payments to Mrs. Smith of 5.0% ($5,000/year) of the initial trust principal for life. Mr. Smith not only qualifies for an income tax deduction of over $42,000, he also avoids the tax on the $70,000 in appreciation that would have resulted had he sold the securities. At Mrs. Smith's death, the trust principal will pass to Seton.  Note: In similar cases, a charitable gift annuity may provide a higher payment.