Charitable Remainder Annuity Trust How it works You transfer cash, securities, or other property to a trust. You receive an income tax deduction and pay no capital gains tax. During its term, the trust pays a fixed amount each year to you or to anyone you name. When the trust ends, its remaining principal passes to the Arch Foundation. Charitable Remainder Trusts are basically similar to the Pooled Income Fund in concept. There are two main types of charitable remainder trusts: Annuity Trusts and Unitrusts. With both types of trusts, you receive a charitable contribution income tax deduction based on your life expectancy, you avoid taxes on capital gains on the sale of appreciated securities or real estate, and you reduce potential estate taxes. The main difference between the two types of charitable remainder trusts is the way your annual income from the trust is determined. The assets given to a charitable remainder annuity trust are valued on the date of transfer to the trust. An annual payout is determined on that date. You receive this same dollar amount each year for life. Any named beneficiaries will also receive this same amount for life. After your death and the death of any beneficiaries, the remaining principal is given to the Arch Foundation. When you create the trust, you receive an income tax charitable contribution deduction based on your life expectancy and the life expectancy of any beneficiaries (such as a spouse). You avoid taxes on capital gains on the sale of any appreciated property such as stocks or real estate. The assets in the trust are removed from your estate for estate tax purposes. (Depending on the existence of named beneficiaries of the trust, some of their expected life income may be included in your estate.) After your death, your designated interests at the University of Georgia will perpetually receive support in your memory. Annuity trusts are usually created with assets worth $250,000 or more. Example: Mr. Jones creates an annuity trust with $250,000. He will receive $17,500 each year for the rest of his life, even in years when the trust does not produce sufficient income to cover the required distribution. The annuity trust must pay out $17,500 even if this income must come from the principal. Types of Giving | Featured Donors | Professional Advisory Reference | Heritage Society | Get In Touch! | Home