Life Income Gift
A life income gift allows you to make a substantial gift to St. Catherine’s while providing you and/or a beneficiary with an income stream for life or a set number of years. Life income gifts are also attractive from a tax perspective.
You may achieve one or all of the following benefits through a life income gift:
- Income tax charitable deduction
- Avoidance of capital gains tax on gifts of appreciated property
- Tax-free income
- Reduction of estate taxes
Examples of life income gifts include:
Charitable Gift Annuity:
A Charitable Gift Annuity is a contract exchanging cash or securities for the guarantee of the St. Catherine’s School Foundation to make fixed quarterly payments as long as the annuitant(s) live(s). They are also a wonderful way to share property with the School to support its work. Gift annuities funded with appreciated stock will avoid tax on the capital gain, turning the appreciated property into a gift for the School and income for you.Gift Annuities may be established with gifts of cash or securities valued at $10,000 or more and may be set up to make payments to either one or two people. Gift annuity payments are fixed, based upon the age of the annuitant(s) when the gift annuity is issued. The older the annuitant(s) is(are), the higher the fixed percentage payment rate will be.
A Charitable Gift Annuity is a gift with many tax benefits:
- an immediate and significant charitable deduction from income tax, as provided by law;
- avoidance of capital gains tax on appreciated property transferred in exchange for the annuity;
- stable, substantial income backed by the assets of the St. Catherine’s School Foundation, and
- a major gift that will perpetuate the School’s mission, and your support for it.
Charitable Remainder Trust:
A Charitable Remainder Trust (CRT) begins with an irrevocable transfer of cash, marketable securities or other property to a trust. The trust sells the property and reinvests the proceeds to pay income to beneficiaries for a lifetime or a term of years, followed by transfer of the remainder to the School.
Payments from a CRT can be either variable or fixed.
- Variable Income: Charitable Remainder Unitrusts pay a set percentage (at least 5% of the annual value of trust assets). The payout changes annually with the value of trust assets, and is designed to increase over time (assuming rising values).
- Fixed Income: Charitable Remainder Annuity Trusts pay a fixed dollar annuity each year, equal to at least 5% of initial assets placed in trust.
Income for your family: A CRT can last for a lifetime, or up to 20 years, or a lifetime followed by up to 20 years. Your CRT can provide for your lifetime, and then make payments to your children or grandchildren. Including a CRT in your will would allow your loved ones to benefit from your resources before directing them to the School.
Inheritance for your family: Another way a CRT can provide for family is to use the income payments to purchase life insurance payable to your family.
Example: Grace, age 68, puts $100,000 of highly appreciated stock into a unitrust, names a trustee, and tells the trustee to pay her 5% of the trust’s assets as revalued every year. The trust will sell the stock, pay no capital gains tax, and reinvest the proceeds. Grace’s trust payments, $5,000 the first year are designed to rise in value in future years, assuming positive investment results. In this way, Grace can stay ahead of inflation.
The above statements constitute general suggestions rather than legal or financial advice. Your professional advisor can help you decide how you might best remember St. Catherine’s School in your plans.
Located in the heart of Richmond, Virginia, St. Catherine’s School is a private, all-girls pre-K, kindergarten, elementary, middle and high school. We provide a well-rounded educational experience for girls from communities across Richmond, Chesterfield, Henrico and all of central Virginia. St.Catherine’s all-girls educational experience is rooted in more than a century of history and tradition. From our revolutionary past to our dynamic present, St. Catherine’s has always focused on preparing students for a boundless future.
