For example, Mr. Edwards is 75 and his wife is 70.  They transfer $20,000 to the American Red Cross for a gift annuity and receive $1,400 annually for life ($20,000 x 7.0% - the annuity rate for their combined ages.)  The full guaranteed payments continue for the survivor's life.

     If you wish, you may defer charitable gift annuity.  You can make the gift now, and the Red Cross will pay you (and another beneficiary, if you wish) life income starting at any date you specify.  This is a great option if you are concerned about retirement income.  Also, you receive the income tax deduction in the year you make the gift.  The amount you receive each year depends on the amount transferred, your age now, and your age when the payments are to start.

     For example, Miss Baker, age 50, transfers $10,000 to the Red Cross for a deferred gift annuity with payments to start at age 65.  Her rate of return will be 6.3%, and she will receive $1,630 per year for life ($10,000 x 16.3%.)

Charitable Remainder Trust

     This life income plan is created by transferring assets to a trust that pays you (and another beneficiary, if you wish) income for life.  At the end of the trust, the remaining trust assets are transferred to the Red Cross.  A bank or trusted advisor can serve as trustee.

     The type of charitable remainder trust you choose determines your annual payments.

Charitable Remainder Annuity Trust

     The charitable remainder annuity trust pays you a fixed dollar amount annually for life.  The fixed payments are determined by the payout percentage selected at the beginning of the trust.  You can claim a charitable deduction on your income tax form the year that you create the trust.  The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.

     For example: Mrs. Edwards irrevocably transfers $100,000 to create a charitable remainder annuity trust that will provide her with life income payments.   Included in the trust agreement is the stated payout percentage of 7.  She will receive $7,000 annually for her life ($100,000 x 7%.)  If income earned by the trust exceeds the fixed payment of $7,000, the excess is reinvested.

Charitable Remainder Unitrust

     The charitable remainder unitrust pays you a fixed percentage of the fair market value of the trust assets, as revalued each year.  Like the annuity trust, you can claim a charitable deduction on your income tax form the year that you create the trust.  The payments you receive are taxed as ordinary income, and in some cases as capital gain or tax-free return of principal.    

     For example: Mr. Edwards irrevocably transfers $100,000 to create a charitable remainder unitrust that will provide him with life income payments.  The trust agreement provides that he will receive 6 percent of the fair market value of the assets each year.  The first year he receives $6,000 ($100,000 x 6%.)  If the trust assets are valued at $120,000, so he is paid $7,200 ($120,000 x 6%.)  If the trust assets are worth $110,000 at the beginning of the next year, he will receive $6,600 ($110,000 x 6%.)  And so on each year.  If trust income exceeds the stated payout percentage, the excess is added to the unitrust assets and reinvested.

     If you are interested in learning more about life income gifts, please contact Elaine Hansen  here at the Red Cross or mowerarc@charter.net or by telephone at (507) 437-4589..