Life Income Gifts
Charitable Gift Annuities and Charitable Remainder Trusts are two types of gift arrangements where you donate assets to Newton-Wellesley Hospital in exchange for payments each year to you and/or another person for life. What is left at the end of the gift plan will benefit Newton-Wellesley Hospital to continue its work and vision.
Charitable Gift Annuity
A gift annuity is a very common gift plan for people who have the desire to give but still have the need to retain income during their lifetime. It is a straightforward contract in which you make a gift and, in exchange, receive payments for life. These secure payments are fixed in amount and will not vary with market fluctuations. The amount of the payment depends on your age at the time you set up the gift annuity.
There are some favorable tax advantages in addition to the annuity payments. You receive an income tax charitable deduction at the time the annuity is funded, which could potentially help you save on your income taxes. In addition, part of each annuity payment usually is not subject to income tax (tax-free). At the end of the gift annuity term, the remaining amount is then used by Newton-Wellesley Hospital towards its most pressing needs.
Charitable Remainder Trust
Like a charitable gift annuity, with a charitable remainder trust you make a gift and receive lifetime income. But because it is a tax-exempt entity, capital gains tax is avoided when appreciated assets are transferred to the trust and when they are sold by the trust. As a result, the full market value of the asset is put to work first for you and ultimately for Newton-Wellesley Hospital. In addition, you receive an income tax charitable deduction for a portion of the trust funding amount, which can be used immediately to save on income taxes.
How a charitable remainder trust works:
- A trust is set up and the funding assets are transferred to it.
- You choose a trustee or serve in that role yourself.
- You as the donor choose the income beneficiaries of the trust. It can be yourself and/or loved ones, friends or others (most commonly you and a spouse). The trustee manages the trust assets and pays income each year to these beneficiaries.
- The amount of income paid to income beneficiaries may be fixed (the same amount each year, offering the security of fixed payments) or variable (based on a percentage of the trust value, offering the possibility that payments may grow over time).
When the trust term ends (usually upon the passing of the income beneficiaries), the amount remaining in the trust is distributed by the trustee to the Newton-Wellesley Hospital Charitable Foundation for use as you directed.
For more information about making a Life Income Gift to Newton-Wellesley Hospital, please contact Liz Gianakos at (617) 243-6751 or NWHCF@partners.org.