Development Office

The Foundation of the Roman Catholic Diocese of Buffalo

CHARITABLE REMAINDER TRUSTS

GIFTS THAT PAY YOU AN INCOME.

Charitable remainder trusts allow you to make a gift to an endowment, while providing you and your family with an income for life (or any period you specify, up to 20 years). Your funds are professionally invested, and when the trusts ends, the full amount is distributed to the endowment you’ve chosen.

You can receive an income tax deduction when the trust is created. The size of the deduction depends on your age, the payments you’ll receive, and other factors. This approach offers an excellent way to supplement your retirement income, or to increase the income from low-yield assets.

CHARITABLE REMAINDER ANNUITY TRUSTS pay you a fixed income. You determine the income percentage (must be at least five percent of the initial value of the trust) and receive that amount annually for the period of time you have chosen.

EXAMPLE

A 72-year-old woman creates an annuity trust in July 1999 for her parish’s endowment with stocks she had purchased for $80,000, but are now valued at $200,000. The annuity is established with the Foundation of the Roman Catholic Diocese of Buffalo. Although the stocks are only yielding four percent (or $8,000 annually), the annuity trust will pay her eight percent a year, or $16,000.

With the trust, she doubles her income, avoids the capital gains tax on the appreciation of the stocks, removes the stocks from her taxable estate, and receives a tax deduction of approximately $79,400.

CHARITABLE REMAINDER UNITRUST are similar to annuity trusts, but the income they pay varies annually with the value of the assets in the trust. As with the annuity trust, you determine the income percentage (must be at least five percent) when you create the trust. Each year, you or your spouse will receive that percentage of the current value of the trust assets. If the value of the trust increases, you’ll receive more.

An advantage of unitrusts is that you can make later additions to the trust amount and receive an income tax deduction for a portion of those contributions.

EXAMPLE

A retired teacher, age 65, is concerned about the future of Catholic schools. He places $50,000 in a unitrust with the Foundation of the Roman Catholic Diocese of Buffalo in July of 1999 to benefit his parish’s education endowment. The unitrust pays him seven percent of the value of its assets. The first year it pays $3,500. During the second year, the unitrust’s assets increase to $55,000, and his seven percent income increases to $3,850.

He is entitled to an income tax deduction of almost $18,720, avoids capital gains tax at the time the trust is created, and can invest his tax savings for more annual income. Had he sold the stocks and invested the after-tax proceeds, his income would have been substantially less.

The Foundation of the Roman Catholic Diocese of Buffalo does not provide advice on tax legal matters. Because state and federal laws govern many types of planned-giving, you should obtain the services of an attorney, accountant or other professional tax advisor.