Income Gifts
There are several forms of smart income gifts. Two of the most popular are Charitable Gift Annuity and Charitable Remainder Trust.
Charitable Gift Annuity
A Charitable Gift Annuity (CGA) allows you to support Phoenix College and receive an income stream for life. You can give a gift of cash, stock, or appreciated assets to PC and receive an income tax deduction and fixed income payments for life. When a Charitable Gift Annuity is created, PC and MCCF pay you income for life by investing the funds. The income payment is determined as a percentage of the original gift, based on the age of the donor, and remains consistent for the donor’s life.
Charitable gift annuities allow you to support Phoenix College students while also ensuring your own financial security. Not only does this type of gift provide you with regular payments and allow us to further our work, but when you create a charitable gift annuity with Phoenix College via the Maricopa Community Colleges Foundation (MCCF) you can receive a variety of tax benefits, including a federal income tax charitable deduction when you itemize.
Jose and Anita’s Charitable Gift Annuity Story
Jose and Anita worked hard all their lives. As they were raising their family, Jose realized that obtaining a certificate of completion would help him advance in his career. He attended Phoenix College and obtained his certification, and he learned so much from the other students and his faculty members. He got a better paying job and says that the experience changed his life! Anita saw what Phoenix College did for their family and they both want to give back. Retirement was important to them and they worked hard to save so they could enjoy life. They wondered how they could give a gift to Phoenix College and make sure to have enough money for the rest of their lives.
Jose’s buddy had been bragging about a Charitable Gift Annuity and the steady income stream he was getting. So, Jose and Anita decided to talk with Phoenix College about a Gift Annuity. Jose and Anita realized they could gift the stock to a Charitable Gift Annuity and save the capital gains taxes they were paying as well as receive an income tax deduction for the gift. Anita was thrilled to learn that they would get a steady income for life and not have to worry about the volatility of the stock market. They were both enthusiastic about giving back to the College that changed their lives.
Charitable Remainder Trust
A Charitable Remainder Trust (CRT) is a Trust that allows the tax-free sale (full or partial) of an asset, business, or property while providing the donor with lifetime income, an income tax deduction today for a future gift, asset protection and potential estate tax savings. The economic benefit of saving taxes provides you with an increase in lifetime income and the opportunity to leave a meaningful gift to Phoenix College. Your attorney would create your Trust in a manner that is in line with this intent.
Jack and Diane’s Charitable Remainder Trust (CRT) Gift
Jack and Diane started a roofing business 20 years ago and were ready to retire. A competitor suggested that he might be interested in buying the business, which interested them, but they were concerned about losing the income from the business as well as the tax bill. Their accountant calculated that they would incur a 20 percent capital gains tax, 5 percent Arizona state tax, and 3.8 percent net investment income tax for a total of 28.8 percent tax on the sale of the business!
At a financial workshop they learned that charitable planning tools could help them with their tax burden, so they went to their advisor to learn more. They decided to allocate half of the stock in the business, $1,000,000, to a Charitable Remainder Trust. This saved them $288,000 (28.8 percent) that they would have paid in taxes. Now they could keep that money, invest it as Trustees of the Trust, and keep it working for them.
They chose to have the Trust pay them 6 percent of the Trust value each year. If they lived for 30 years that would be more than $2,000,000 in income. Because they decided to have the corpus of the Trust go to their favorite charitable causes after they both passed away, they were able to get a $275,000 income tax deduction for the future gift today. Since they sold the other half of the business outside of the Trust, they were in the highest tax bracket of 40 percent, so the income tax deduction became $110,000 of tax savings.
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