Life Income Gifts
Through a charitable trust or charitable gift annuity, you can transfer assets to the Oregon Symphony now, and in return, you (or your heirs) can receive income back for life. This program is attractive if you have assets (such as stocks or real estate) that produce little or no income but have increased in value, and would incur substantial capital gains tax if sold. Such a gift has many advantages:
- Provides an immediate income tax reduction;
- Avoids capital gains taxes;
- Removes the asset from the taxable estate; and
- Provides a secure source of income back to the donor (or designees).
Charitable Gift Annuity
In exchange for your gift, the Oregon Symphony pays you (or another beneficiary) a fixed amount annually for life. A portion of the income payments are tax free. The Oregon Symphony uses the charitable gift annuity rates recommended by the American Council on Gift Annuities. These rates are based on the age of annuitant; the rates for two lives are less than a single life annuity because the period of payment may be longer.
Mrs. Alder, age 75, transfers $10,000 to the Oregon Symphony for a gift annuity. She will receive a guaranteed annual income of $710, which may be paid in quarterly, monthly or annual installments ($10,000 x $7.1%—the annuity rate for her age).
Mr. and Mrs. Jones, ages 70 and 73, transfer $50,000 to the Oregon Symphony and receive $3,000 annually ($50,000 x 6%—the annuity rate for their combined ages). The full guaranteed payments continue for the surviving spouse’s life.
Deferred Charitable Gift Annuity
You may defer your payments from your charitable gift annuity by making the gift now and specifying the date when you wish life income payments to begin. Many donors choose this option to provide retirement income.
Ms. Benson, age 50, transfers $100,000 to the Oregon Symphony for a deferred gift annuity with payments to start at age 65. Her rate of return will be 12.2% and she will receive $12,200 each year from age 65 through life.
Charitable Remainder Trusts
Transfer assets to a trust that will pay you (and/or other beneficiaries) income for life. At the end of the trust, the remaining trust assets are transferred to the Oregon Symphony.
A Charitable Remainder Annuity Trust pays you a fixed dollar amount annually for life. These payment amounts are determined by the payout percentage selected at the beginning of the trust. You can claim a charitable deduction on your income tax for the present value of the amount donated in the year that you create trust, and may also avoid capital gains tax on long-term appreciated assets used to create the trust.
Mr. Radcliffe irrevocably transfers $200,000 to create a charitable remainder annuity trust, with a stated pay out percentage of 7%. He will receive $14,000 annually for his life ($200,000 x 7%). Mr. Radcliffe may receive a charitable deduction in an amount based on his life expectancy.
A Charitable Remainder Unitrust differs from the Annuity Trust in that the payout amount is based on a set percentage of the value of the trust assets, reassessed each year. Such a plan has greater flexibility than the annuity trust and may serve as a supplemental retirement plan.
Miss Farthing irrevocably transfers $300,000 worth of appreciated stock to create a Charitable Remainder Unitrust. The trust agreement provides that she will receive 6% of the fair market value of the assets each year. In the first year she receives $18,000 ($300,000 x 6%). One year later the assets are valued at $305,000, so she is paid $18,300 ($305,000 x 6%). If the value of her trust increases, so will her income payments. She avoids paying capital gains tax on her appreciated securities and also obtains a sizable income tax charitable deduction in the year of the gift.
Charitable Lead Trusts
This strategy allows you to pass assets on to your family with significant estate tax savings while making a gift to the Oregon Symphony. In a lead trust, income is paid to the Oregon Symphony for a number of years. During the term of the trust, the Symphony receives the income earned from your gift. When the term of the trust is completed, the principal may be transferred to other beneficiaries (often children or grandchildren), with estate or gift taxes usually reduced or even eliminated.
Mr. and Mrs. Linzer own stock valued at $1,000,000. If they were to give the stock directly to their children, or will the shares to their children through their estate, they would incur taxes of up to 55% of the value. By transferring the stock to a charitable lead trust, they reduce substantially the amount of the taxable gift to the children. If the value of the stock increases over the term of the trust, the entire appreciated value passes directly to their children with no additional tax.
The trust generates an amount equal to 7% annually to the Oregon Symphony (or $70,000) during the 15 years of the trust. At the end of the trust, the Linzers’ children will receive the entire stock portfolio and the taxable portion of the gift will have been reduced substantially, even if the stock has appreciated in value during the time of the trust.
Please contact the Oregon Symphony Development office at 503-228-4294 to discuss opportunities for planned giving or e-mail Foundation@orsymphony.org.