The Annuity Trust:
Predictable Life Income

Suppose that you would like to receive a fixed and certain dollar income from your own separate trust for life. You can, with an annuity trust.

This is a trust you create to pay yourself a known annual income that is determined at the outset, based on your personal needs and circumstances. After your lifetime, the principal of your trust goes to United Cancer Research Society as an enduring contribution to further our work.

The annuity trust is a plan authorized by tax law to encourage philanthropy. You are entitled to some very desirable tax bewnefits when you establish an annuity trust.

How an Annuity Trust Works
To set up this plan, you irrevocably transfer cash or securities (or both) to an annuity trust, to be professionally managed by United Cancer Research Society. The trust then pays you an income for life. At the start, you decide on the fixed dollar amount you want to receive each year, payable in quarterly installments.

Example: This year janet, age 70, transfers $100,000 in appreciated securities to an annuity trust, securities that previously yielded only $3,000 a year. She arranges to have the trust pay her an income of $7,000 annually for life.

If you wish, you can choose to have the trust pay an income to a survivor (your spouse, other relative, or friend, for example).

How Income Tax Savings are Figured
In the year in which you create and fund an annuity trust, you get a sizable income tax charitable deduction. This is based upon the value of our right to receive the remainder of the trust assets after your lifetime. The value is determined by official U.S. Treasury average lifetime expectancy tables.

Example: As Janet is 70 years old, according to the tables she is entitled to an income tax vcharitable deduction of $49,751*  on the $100,000 she used to fund her annuity trust. She contributed long-term securities, so this year she can use her deduction up to 30% of her adjusted gross income. Any excess is deductible over the next five years. *(The U.S. Treasury tables used to calculate charitable deductions for some new life income plans change monthly. We'll be glad to furnish precise calculations in your case, withobligation.)

If you fund your annuity trust with cash, the ceiling on deductiblity is raised to 50%. As noted earlier, Janet used appreciated securities to fund her trust. She will pay no tax on the appreciation. Her deduction is calculated on the current market value of the securities, instead of their lower cost basis.

As you might expect, the older the beneficiary of a newly established annuity trust, the higher the charitable deduction. If a survivor is named as a beneficiary, the charitable deduction is lower, because the payments continue for a longer period.

The payments each year from an annuity trust may result in favorable tax treatment if they include tax-exempt income or a tax-free distribution of principal. This depends on the strategy followed when the trust assets are invested or reinvested.

To learn how an annuity trust can fit into your personal financial plan, please give United Cancer Research Society a call. Your inquiry is welcome.

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Weigh the Benefits You Can Enjoy:

A fixed and certain dollar income for life.

A sizable income tax charitable deduction.

A way to increase income from a low-yield holding.

Freedom from investment responsibilities.

Avoidance of capital gains tax on appreciated assets used to fund the trust.

Foremost among the benefits is the enduring memorial you create to support our work.