Home of the Innocents

	A charitable remainder trust is:
	• • • •	an irrevocable trust that will pay you income for your lifetime or for a term of years that you select (not to exceed 20 years). the payments can be made either to you, or to one or more income recipients that you select. following your lifetime, assets that remain in the trust will come to the Home of the Innocents endowment fund, to further our mission to provide the skills and opportunities by which vulnerable children, youth and their families may improve their lives.

Annuity and Unitrusts are the two types of charitable remainder trusts. These two types of trusts are very similar in many respects. The primary difference is in the way the income payout is calculated. With both types of trusts, the value of the charity’s remainder interest must be at least 10% of the initial fair market value of all property placed in the trust.

What is An Annuity Trust?
A charitable remainder annuity trust provides for a fixed annuity payment of not less than 5% of the initial value of the trust assets to one or more persons, with an irrevocable remainder interest contributed to Home of the Innocents upon the termination of the trust. You will set the percentage at the time the trust is established. What affects the amount of the charitable contribution you can claim on your income tax return, and other tax consequences concerning your gift is the percentage you select when you set up the trust, and the age(s) of the income recipients. You can choose whether to have your payments made on a monthly, quarterly, semi-annual or annual basis. The annual payment never varies, regardless of the income the trust assets earn, or appreciation or depreciation in the value of the trust assets.
You will not be allowed to make additional contributions to your annuity trust, because your payments are fixed and are based upon the value of your initial gift. You may, however, establish as many additional annuity trusts as you want.

What is A Unitrust?
A charitable remainder unitrust is very similar to an annuity trust, except that the annual payout generally is a fixed percentage of not less than 5% of the value of trust assets (which are valued annually). You will set the percentage when you make your initial gift. In general, the unitrust amount (your payment) rises and falls as does the value of the trust assets. Because trust assets are re-valued every year, your payments will change each year.With this trust option, you may enjoy an increase in your trust payments over the years if the value of the trust assets increases.

There are some different types of unitrusts:

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The Net Income With Make Up (NIMCRUT) charitable remainder unitrust distributes the stated percentage each year, whether or not the trust has actually generated enough income to meet that amount. The deficit is made up from the trust principal in those cases.
The Flip or Type II charitable remainder unitrust pays all of the trust income for the taxable year, in lieu of the specified unitrust payment amount, as long as such income is less than the stated percentage. Such a unitrust is most appropriate for a gift of real property or other non-liquid assets. The trust then "flips" to a regular unitrust when the asset is sold and there are more liquid assets in the trust to provide income.

GIFT ANNUITIES

A charitable gift annuity is:

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a type of gift that will give back to you
you give a gift to the Home of the Innocents, but in return you
receive an annuity income for your lifetime
you irrevocably gift the amount to the Home, and the Home in
return agrees to pay you a fixed payment for life
you enter into a charitable gift annuity contract with the Home of
the Innocents, and the Home’s promise to pay is backed by all of
the assets of the organization
following your lifetime, whatever remains of your gift comes to
the Home.

What Will My Payment Be?
The Uniform Gift Annuity Rates, which are recommended by the American Council on Gift Annuities (a voluntary association of 25 members representing over 700 Gift-Annuity-issuing agencies), have been computed with the intention of producing, if possible, a remainder interest to the charity of approximately 50% of the original gift amount. For this reason, the rates are generally lower than what you might find offered by an insurance company (where there is no gift involved). The rates are based on actuarial studies of the life expectancy of gift annuitants and on the expected rate of income to be earned on invested reserve funds.
The annuity payment is based on your age (and the age of any other annuitant you might name), the day you make the gift, and on the amount of your gift. You may choose whether to receive your payments on a monthly, quarterly, semi-annual or annual basis. You may choose to delay your first payment for a period of time. Rates on a gift annuity are very favorable when compared to certificates of deposit or savings bonds. CLICK HERE FOR SAMPLE GIFT ANNUITY RATESWhy Would I Want A Gift Annuity?
There are many benefits to entering into a gift annuity contract with the Home of the Innocents, not the least of which is potential favorable tax benefits and the joy of making a gift that you know will provide support to the mission of the Home following your lifetime. Charitable gift annuities make it easier to make a substantial gift during your lifetime, because you will be receiving a fixed income stream for life. Typically, part of each payment that you receive will be tax-free, will likely receive an immediate current income tax deduction for the fair market value of your gift, minus the present value of the annuity payments that you are estimated to receive over your lifetime.
Long-term (held for more than a year) appreciated assets, such as stock, that are not currently paying a dividend are an excellent choice for using to acquire a gift annuity. You will avoid paying the capital gains tax on the transfer of those assets, as they are being irrevocably gifted to charity, and you will begin to receive an income stream in the form of annuity payments.

What Else Should I Know?
You must understand that your gift to the Home of the Innocents through a charitable gift annuity is irrevocable - that is, you can't change your mind once the gift is made.
Once you have entered into the gift annuity contract with the Home, the amount of your payments will always remain the same. You can’t add to your gift annuity, but you can set up new gift annuities at any time.
Gift annuities can be used to provide income to you, or to another person that you designate, or to you both. This can be a useful way to provide additional income for an aging parent, for example. A gift annuity contract can be written to pay you alone, or to pay you first, and then your spouse, or it may pay any two persons you select. Payments can be made either to one annuitant for their lifetime and then to a second annuitant for their lifetime, or they can be made jointly to both annuitants and then to the survivor. Due to the longer payment period, two-life annuity rates are slightly lower than those for a single life.

The Home of the Innocents, Inc. does not render legal, tax or other professional advice. You should always seek advice from an attorney and other professional advisors when considering making a charitable gift. Please contact Lisa Cobb, Major Gifts and Planned Giving Manager, at 502.596.1021 or email us for more information.