Charitable Remainder Annuity Trust
(Gift example*)
Example
A 70-year-old donor in the 35% tax bracket establishes an annuity trust with $100,000 of appreciated stock, originally purchased for $10,000. Trust pays donor 6.0% of the initial value as an annuity for life. Trust earns an 8.0% average total return. Assume IRS discount rate of 5.8%.
Trust
principal |
$100,000 |
Income
tax deduction |
$47,168 |
Income
tax savings (35%) |
$16,589 |
Cap.
gains tax savings (15%) |
$13,500 |
Annual
income |
$6,000 |
Projected
after-tax benefit to donor |
$70,247 |
Projected
benefit to MDA |
$160,649 |
PLEASE NOTE: These examples are for illustrative purposes
only and are not intended as legal or tax advice. Consult your own legal
and tax advisors prior to making any material decisions based on this data.
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