Investing with Faith / James Maslar

Pay it forward and pay it back: Life income gifts make both possible

“Paying it forward” is a wonderful way to look at giving what we have to others. But sometimes the uncertainties of life and our own needs can make it hard for us to commit to giving as much as we’d like.

We want to respond to God’s call to share the blessings he has given us, but we also want to be responsible when it comes to providing for our own future needs—as well as the needs of those closest to us.

The good news is that we don’t have to choose one over the other and hope it all works out. It’s possible to both give and receive; a Life Income Gift may help you do just that.

Pay it forward

Life Income Gifts provide much-needed support for the mission of the Church. Through the planned giving vehicle that is best suited to donors’ needs, the ministries and initiatives closest to their hearts can flourish.

Pay it back

The three types of Life Income Gifts we most frequently receive are:

—Charitable Gift Annuities (CGA)

—Charitable Remainder Annuity Trusts (CRAT)

—Charitable Remainder Unitrusts (CRUT)

All three of these planned giving structures provide an income stream for donors—or their loved ones—with fixed payments for life. The differences between them, however, are also worth consideration.

A CGA is simple to establish through the archdiocese’s Catholic Community Foundation. Donors transfer assets such as cash, stock or other appreciated property to a Catholic organization of their choosing in exchange for fixed payments, which can be deferred. The annuity amount is based on the beneficiary’s age, the interest rate and the amount of the gift. At the time of death, whatever is left in the fund is given to the organization.

Both CRATs and CRUTs must be established through an attorney or financial advisor. A CRAT can provide fixed payments to a beneficiary for life and then distributes at least 10% of the value of the fund to a Catholic organization. Donors can choose:

—the annual payment amount (at least 5%, or higher as long as a minimum of 10% of the value will remain for the designated charity),

—how long the income will be paid (for the life of one beneficiary, the lives of two or more beneficiaries, or over a specific period of time up to 20 years), and

—who will oversee the trust (a bank, attorney, family member, or other qualified person or organization.

While CRUTs operate in a similar way, the two main differences are:

—A unitrust structure allows donors to add additional assets to the value of the fund, while a CRAT does not.

—A unitrust’s income payments are a percentage of the fund’s value and therefore fluctuate with the value of the trust, while an annuity trust’s income stream is fixed.

Life Income Gifts can be used to realize investment, retirement or estate goals. It’s even possible to use a CRAT to establish an education fund that benefits children or grandchildren. And there are tax benefits available to people who choose to support charities through these types of planned giving as well.

But most importantly, Life Income Gifts help donors ensure a stream of income that can help them meet their own financial needs and obligations while enabling them to sustain a commitment to giving. As St. Paul reminds us, “A person will reap only what he sows” (Gal 6:7). With Life Income Gifts, that’s exactly what happens.

If you’re interested in considering whether a Life Income Gift is right for you, the Catholic Community Foundation is here to help. Contact us at 317-236-1482 or ccf@archindy.org.
 

(James Maslar is a Catholic philanthropic advisor for the archdiocese’s Catholic Community Foundation. Tax or legal information provided herein is not intended as tax or legal advice. Always consult with your legal, tax or financial advisors before implementing any gift plan.) †