Charitable Remainder Annuity Trust

A charitable remainder annuity trust is a gift plan defined by federal tax law that allows you to provide income to yourself or others while making a generous gift to Chatham University. The income may continue for the lifetimes of the beneficiaries you name, a fixed term of not more than 20 years, or a combination of the two.

As an annuity trust donor, you irrevocably transfer assets, usually cash or securities, to a trustee of your choice, such as Chatham University or a bank trust department. During the trust’s term, the trustee invests the trust’s assets. Each year, the trustee distributes a fixed dollar amount to your income beneficiaries. The payments must be between 5% and 50% of the trusts initial value and are made out of trust income, or the trust principal if income is not adequate. Payments continue until the trust term ends or the highly unlikely event that the trust distributes all its assets. When the annuity trust term ends, the trust’s principal passes to Chatham University, to be used for the purpose you designate.

Benefits of a charitable remainder annuity trust

• The income beneficiaries you name will receive fixed annual income for life, or for the period you designate.
• You will qualify for a federal income tax deduction.
• If you fund the annuity with an appreciated asset and the trust sells it, there will be no immediate tax on the capital gain. If you were to sell such an asset yourself, you would owe tax on all the capital gain realized in the sale.
• You may add to the trust in the future, unlike a charitable gift annuity.
• Your estate may enjoy reduced probate costs and estate taxes.
• You will provide generous support of Chatham University.
• Your gift will benefit from expert asset management, provided by the same professionals who manage the College’s endowment.

Example of a charitable remainder annuity trust:
Elizabeth W., class of 1947, irrevocably transfers $50,000 in cash to Chatham University. Elizabeth elects for a 6% payout rate and receives $3,000 in income each year. If she chooses, Elizabeth may add to the trust in the future to increase its value and therefore increase her income. Elizabeth also receives a $27,294.50 charitable deduction in the year that she makes the gift. Finally, Elizabeth is able to support, in a major way, a Chatham program in which she is especially interested.