What Is A Charitable Remainder Annuity Trust?
A charitable remainder annuity trust ("annuity trust") is a gift plan defined by federal tax law that allows you to provide income to yourself or others for life or a term of years while making a generous gift to Salus University or one of its Colleges. At this time the foundation that receives all contributions in support of the University and its Colleges continues to be named the Pennsylvania College of Optometry Foundation. Trusts that benefit the University or its Colleges should still be designated to the PCO Foundation.
As an annuity trust donor, you irrevocably transfer assets, usually cash or securities, to a trustee of your choice (for example a bank trust department). During the trust's term, the trustee invests the trust's assets. Each year, the trustee provides a fixed dollar amount to one or more income beneficiaries named by you. The payments must be at least 5% of the trust's initial value and are made out of trust income, or trust principal if income is not adequate. Payments may be made annually, semiannually, or quarterly.
When the annuity trust term ends, the trust's principal passes to the PCO Foundation to benefit the University or one of its Colleges for the purpose you designate.
If you irrevocably transfer $50,000 in cash to an annuity trust that pays 5% of its initial value each year for the lifetime benefit of an individual, age 72,
Your Benefits Include:
- You will qualify for a federal income tax deduction of approximately $27,308. Your deduction may vary modestly depending on the timing of your gift. Note that deductions for this and other gifts of cash and non-appreciated property will be limited to 50% of your adjusted gross income. You may, if necessary, take unused deductions of this kind on tax returns over the next 5 years, subject to the same 50% limitation.
- Your designated income beneficiary will receive fixed payments in quarterly installments totaling $2,500 each year for life.
- Your estate may enjoy reduced probate costs and estate taxes.
- You will provide generous support to Salus University or one of its Colleges.
- Your gift will benefit from expert asset management.
For More Information
Lynne C. Corboy,
Director of Development