Life Income Funds & Charitable Lead Trusts

There are a variety of ways you may benefit your favorite charitable organizations while receiving a fixed, guaranteed sum of money for life. You can also benefit a charity and pass principal to your family with significant tax benefits.

Charitable Gift Annuity
[Minimum Annuity is $10,000 for 1 life and $15,000 for two lives]

  • A simple contract between the Donor and our Foundation in which the Donor transfers cash or publicly traded stock to the Foundation for the benefit of the Donor’s chosen charitable organization(s), and the Donor receives a guaranteed, fixed sum of money for life or joint lives
  • The Jewish Community Foundation of Orange County is licensed by the State of California to issue Charitable Gift Annuities by the State Department of Insurance
  • Through a Deferred Charitable Gift Annuity, a donor can provide an increased cash flow for any beneficiary’s life at a later date
  • Lifetime payment amounts are set by the American Council on Gift Annuities based on the beneficiary’s age at the time payments begin and when the gift is made
  • Donor receives an immediate charitable deduction on income tax, and may avoid capital gains tax
  • Partially tax free payments are distributed quarterly
  • The remainder of the Annuity establishes an endowment fund within the Jewish Community Foundation for the benefit of any charitable organization(s) chosen by the Donor

Charitable Remainder Trust

Charitable Remainder Trusts are a good way for your client to obtain a charitable income tax deduction, avoid capital gains tax for the sale of appreciated securities or real estate, and reduce estate taxes while providing a donation to a favorite charitable organization in a permanent endowment.

  • Assets are transferred to a charitable trust, and the Donor receives an immediate charitable deduction
  • Donor can convert appreciated assets, such as stock or real estate, into income without incurring immediate capital gains tax
  • Income is produced for the Donor and/or beneficiaries, and increased cash flow can occur now or at a later time and may be used to fund a retirement plan
  • The Donor may receive more income than the original asset through funds invested at a higher yield
  • The trust assets are removed from the estate for estate tax purposes (some of the Donor’s expected life income may be included in the estate depending on the existence of named trust beneficiaries).
  • The Donor can control income and charitable beneficiaries, with the remainder of the trust passing to charitable organization(s) of the Donor’s choice

Charitable Lead Trusts

These trusts enable donors in high estate and gift tax brackets to benefit charitable organization(s) of their choice and to pass principal to family members with little or no tax penalty.

  • Donor irrevocably transfers assets to a charitable trust
  • During the donor’s lifetime, income from the charitable trust benefits one or more charities designated by the donor for a term of years or for a lifetime
  • After the termination of the charitable trust, the remaining trust assets can pass to donor’s designated beneficiaries/heirs (children/grandchildren)
  • The transfer of assets to the donor’s beneficiaries occurs at greatly reduced or eliminated federal estate and gift tax cost
  • This vehicle works well for donors anticipating high estate and gift taxes, but the grantor trust is not exempt from income tax and gifts to the trust do not qualify for annual gift exclusion unless the final beneficiary is a charitable organization
  • May be created during the donor’s lifetime or through the donor’s Will or Living Trust

If you’d like more information about these options, please contact our Jewish Community Foundation at 949 435-3490 or wendy@jcfoc.org.

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