HELPFUL GIFTING TERMS AND DEFINITIONS
Charitable Gift Annuity - A donor irrevocably transfers a specific sum of cash, appreciated securities, or other property to a qualified charitable organization in return for its promise to pay the donor, another, or both, fixed and guaranteed annual payments for life. In essence, the transfer is part charitable gift and part purchase of an annuity. At the death of the last survivor, the funds remaining will belong to the charitable organization for the purpose specified by donor in the annuity agreement.
Charitable Remainder Trust - An arrangement in which property or money is donated to a charity, but the donor (called the grantor) continues to use the property and/or receive income from it while living. The beneficiaries receive the income and the charity receives the principal after a specified period of time. The grantor avoids any capital gains tax on the donated assets and also gets an income tax deduction for the fair market value of the remainder interest that the trust earned. In addition, the asset is removed from the estate, reducing subsequent estate taxes. While the contribution is irrevocable, the grantor may have some control over the way the assets are invested and may even switch from one charity to another (as long as it's still a qualified charitable organization).
Deferred Gift - Any charitable gift arrangement where the charity’s use of the asset is delayed to some future time.
Estate Planning - The process of accumulating and disposing of an estate to maximize the goals of the estate owner.
Life Estate - A limited right to use or occupy property for the life of the person holding the estate after which the property reverts to the grantor or a named third party.
Revocable Trust - A trust that may be altered as many times as desired in which income-producing property passes directly to the beneficiaries at the time of the grantor's death. Since the arrangement can be altered at any time, the assets are considered part of the grantor's estate and they are taxed as such.
Charitable Remainder Trust - An arrangement in which property or money is donated to a charity, but the donor (called the grantor) continues to use the property and/or receive income from it while living. The beneficiaries receive the income and the charity receives the principal after a specified period of time. The grantor avoids any capital gains tax on the donated assets and also gets an income tax deduction for the fair market value of the remainder interest that the trust earned. In addition, the asset is removed from the estate, reducing subsequent estate taxes. While the contribution is irrevocable, the grantor may have some control over the way the assets are invested and may even switch from one charity to another (as long as it's still a qualified charitable organization).
Deferred Gift - Any charitable gift arrangement where the charity’s use of the asset is delayed to some future time.
Estate Planning - The process of accumulating and disposing of an estate to maximize the goals of the estate owner.
Life Estate - A limited right to use or occupy property for the life of the person holding the estate after which the property reverts to the grantor or a named third party.
Revocable Trust - A trust that may be altered as many times as desired in which income-producing property passes directly to the beneficiaries at the time of the grantor's death. Since the arrangement can be altered at any time, the assets are considered part of the grantor's estate and they are taxed as such.
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