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For more information
on ways to leave a lasting
legacy at Cardinal Glennon
Children’s Medical Center,
please call the
Office of Development at
314.577.5605 or
800.269.0552.
You may also email us at
info@glennon.org
All inquiries will remain
confidential.
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The Annuity Trust: Predictable Life Income
The Charitable Remainder Annuity Trust is created to pay yourself (and/or
your loved ones) a known annual income that is determined at the outset and
based on your personal needs and circumstances. The annuity trust is similar
to the Unitrust in many but not all aspects. After the death of the donor or
the last beneficiary, the principal of your trust goes to Cardinal Glennon
Children's
Medical Center as a gift of a lifetime to the children we serve.
How an Annuity Trust Works
To set up this plan, you irrevocably transfer cash and/or securities to an
annuity trust. The trust then pays you an income for life. At the start, you
choose the fixed dollar amount of income you wish to receive each year, for
example payable in quarterly installments.
Example: This year Clara, age 70, transfers $100,000 in appreciated
securities to an annuity trust. These securities previously yielded only
$3,000 a year. She arranges for the trust to pay her an income of $6,200
annually for life.
As Clara is 70 years old, according to the tables, she is entitled to an
income tax charitable deduction of $40,062 on the $100,000 she used to fund
her annuity trust. She contributed long-term securities, so this year she
can use her deduction up to 30% of her adjusted gross income. Any excess is
deductible over the next five years.
If you fund an annuity trust with cash, the ceiling on deductibility is
raised to 50%.
As noted earlier, Clara used appreciated securities to fund her trust. She
will pay no tax on the appreciation. Her deduction is calculated on the
current market value of the securities instead of their lower cost basis.
If you wish, you can choose to have the trust pay an income to a survivor
such as your spouse, another relative or a friend.
Weigh the Advantages of the Annuity Trust
An annuity trust offers many advantages:
1. A fixed and certain dollar income for life.
2. A sizable income tax charitable deduction.
3. A way to increase income from a low-yield holding.
4. Freedom from investment concerns.
5. Avoidance of capital gains tax on appreciated assets used to fund
the trust.
6. The joy of knowing you will be supporting the sick and injured children
of Glennon.
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