The Dayton Foundation: For Professional Advisors: Types of Life Income Plans

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Types of Life Income Plans

Charitable Lead Trusts

With a charitable lead trust, your clients may transfer assets to a trust, then gift the income to a charity of their choice. Eventually the assets are distributed to their beneficiaries. Properly set up, this type of planned and deferred gift may help your clients redirect income to charity and avoid estate taxes in the future.

Charitable Remainder Trusts

Charitable remainder trusts are a versatile vehicle that provides a life income plan. Your clients' assets are placed in a trust that will provide their beneficiaries with income for life or for a fixed term. The remainder is then transferred to The Dayton Foundation to establish a fund according to their wishes. Income arrangements for charitable remainder trusts are very flexible. Plus, your client receives an immediate income tax deduction for the trust's charitable portion.

Click here for a scenario illustrating the benefits of creating a charitable remainder trust.

“Charitable Remainder Trusts are powerful tools that, when used as part of a complete plan to transfer family wealth and values, provide benefits to the donor's family and to charity.” – Jeffrey R. Dundon, J.D., LLM, The Law Office of Jeffrey R. Dundon

Pooled Income Funds

A pooled income fund is like a mutual fund. Gifts to it entitle your client to a share of the fund's annual income. This varies from year to year depending upon market conditions. They also offer higher tax deductions, because they preserve most of the gift for its eventual charitable purpose.

Charitable Gift Annuities

Charitable gift annuities provide guaranteed income for life. That income is paid to your clients every year regardless of market conditions. The remainder portion of each annuity gift is set aside and used to create a charitable fund following your clients' death.

Charitable gift annuities provide slightly lower tax deductions than other income plans. However, they usually deliver better income than bonds and other money market instruments.

Click here for a scenario illustrating the benefits of creating a charitable gift annuity.

More information about charitable gift annuities is available in our brochures, Charitable Gift Annuities: A Life Income Plan and a Lasting Charitable Gift.

“For clients who want a current charitable tax deduction and a larger retirement income, a deferred charitable gift annuity might be the answer. It also can be a versatile retirement planning tool for younger individuals. I’m Joe Baldasare, vice president, Development. I can tell you more about this and other planned giving options.”

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File date: 01-06-2012