Through advantageous tax treatment under both state and federal law. A special gift arrangement is merely a way to make a gift and also enjoy the benefits of these laws. In return, the fund pays each named beneficiary a proportionate share of the net income earned by the fund each year for life. The payments can begin now or be deferred until a future date, usually planned to coincide with a beneficiary's retirement.
Income is guaranteed for life and fixed at a rate determined by the beneficiary's age.
The growing popularity of charitable remainder trusts, which were introduced by the Tax Reform Act of 1969, have greatly benefited the financial and estate planning flexibility available to us all. To qualify for the charitable deduction for federal tax purposes, the trust must conform to the requirements of a Unitrust or Annuity Trust. The primary feature of a Unitrust is that it provides for payments to the income beneficiary in an amount that will vary with investment performance. The trust pays a fixed percentage of the net fair market value of the trust assets valued annually. The Annuity Trust shares many common features with the unitrust, the principal difference being the manner of calculating the payment to the income beneficiary.