Gifts that Pay You Income

Gifts that Pay You Income

You receive steady income. You power lifesaving research to cure cancer faster. Achieve both goals with a gift to Fred Hutch that pays you income. You shouldn’t have to choose between your financial security and your philanthropic goals. With a charitable gift annuity or a charitable remainder trust, you don’t have to.

Charitable gift annuities

With a charitable gift annuity, you can make a gift to Fred Hutch and receive tax-favored income for life. Charitable gift annuities offer attractive payout rates for those who want to support Fred Hutch while maintaining an income stream.

Benefits:

  • Very attractive annuity rates.
  • Fixed payments that you can count on.
  • A portion of each annuity payment will be tax-free (through life expectancy).
  • Income payments can be made annually, quarterly or monthly.
  • Immediate tax deduction for a portion of your gift.
  • Your gift is removed from your taxable estate.


Here’s how it works:
Say that Justin, 66, and Mary, 65, want to make a legacy gift but also want to ensure they have income for their retirement. They establish a $25,000 charitable gift annuity with Fred Hutch. Based on their ages, they will receive a payment rate of 4.3 percent, which means they will receive $1,075 each year for life. They are also eligible for a federal income tax deduction in the year of their gift of $6,522.* After their joint lifetime, Fred Hutch will use the remaining funds to support our lifesaving work.

*Based on annual payments and a 2.2 percent charitable midterm federal rate. Deductions vary based on amount given.

Charitable gift annuities come in many forms — you can fund them with cash or with other assets; you can begin receiving payments now or defer them; and you can even have payments made to another individual for their life.

One of the most popular ways our donors make their gift is by funding it with appreciated stock they have owned for over a year. In addition to receiving an immediate income tax deduction, they can avoid capital gains tax on a portion of the gift. This maximizes the gift’s potential and allows the donor to use the rest of the gain over their lifetime.

Click here to see more information about the kinds of charitable gift annuities available to you.

Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.

Charitable remainder unitrust

You can receive income for life and reduce your taxes while supporting Fred Hutch by transferring cash or assets to fund a trust. Not only does this approach pay variable income to you or your beneficiaries for life, but you also receive a tax deduction the year you transfer assets to the trust. The remaining portion of the trust, after all payments have been made, goes to Fred Hutch.

Benefits:

  • Receive income for life for you or your heirs.
  • Income has a chance to grow as trust assets grow.
  • Avoid capital gains tax on the sale of appreciated assets.
  • Unlike when you sell your funding asset and pay taxes out of the proceeds, 100% of the funding asset is available to generate income payments.
  • Receive an immediate tax deduction for the charitable portion of the trust.
  • Create a legacy at Fred Hutch.

Here’s how it works: Susan, 75, wants to make a legacy gift, but also wants more income in the future. Susan creates a charitable remainder unitrust. The trust makes payments to her every year for the rest of her life. She chooses payments equal to 6 percent of the fair market value of the trust assets as revalued annually. She funds the trust with $500,000 cash. Susan receives $30,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual revaluation of the trust’s assets. She is eligible for a federal tax deduction of $274,210* in the year she creates and funds the trust. This deduction saves Susan $90,490 in her 33 percent tax bracket.

*Based on annual payments and a 2.2 percent charitable midterm federal rate. Deductions vary based on amount given and income payments.

Charitable remainder annuity trust

This trust works the same as a unitrust, but offers fixed payments for you or your beneficiaries. You can count on receiving a steady and predictable income stream instead of income that varies based on the trust’s investment performance.

Benefits:

  • Receive fixed income for life.
  • Avoid capital gains tax on the sale of appreciated assets.
  • Unlike when you sell your funding asset and pay taxes out of the proceeds, 100% of the funding asset is available to generate income payments.
  • Receive an immediate tax deduction for the charitable portion of your gift.
  • Create a legacy at Fred Hutch.


Here’s how it works:
John, 80, wants to make a legacy gift while creating a reliable source of retirement income. He transfers appreciated securities worth $300,000 to create a charitable remainder annuity trust with Fred Hutch. John chooses a payment rate of 6 percent, which means he will receive $18,000 each year for life. This amount is fixed and will not change in future years. No capital gains taxes are due at the time of the transfer into the trust or the sale of the securities by the trust, leaving the full $300,000 to generate future income.

John is also eligible for a federal tax deduction of $167,238 in the year he creates and funds the trust.* This deduction may save John $55,190 in his 33 percent federal tax bracket. After his lifetime, Fred Hutch will use the remaining funds to support our lifesaving work.

*Based on quarterly payments and a 2.2 percent charitable federal rate. Deductions vary based on amount given.

To turn your passion for curing cancer into a lasting legacy, contact us at 800.279.1618 or at plannedgiving@fredhutch.org for more information about legacy giving.

Fred Hutchinson Cancer Research Center is a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code, and contributions made to it are tax-deductible to the extent permitted by law. The purpose of these web pages is to provide general educational information about charitable gifts, financial considerations and estate planning. They are not intended as legal, accounting or other professional advice. For assistance in planning charitable gifts with tax and other financial implications, the services of appropriate advisers should be obtained. Consult an attorney for advice if your plans require revision of a will or other legal document.

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