Life Income Gifts
The Cal State East Bay Educational Foundation offers several types of income-producing gift plans. Discover how your gift of cash, stock or other property to Cal State East Bay can provide you and a loved one with annual income.
These types of gifts can provide you with attractive financial and tax benefits while at the same time create a significant gift for Cal State East Bay. Depending on your situation, several different life income arrangements are available.
Life Income Gifts: Charitable Remainder Trusts
A charitable remainder trust (CRT) is a life income arrangement that enables you to convert an asset, usually appreciated stock or real estate, into an income stream by making an irrevocable gift of the property. Once transferred into the CRT, these appreciated assets can be sold tax-free and are reinvested into a diversified portfolio. As a result, you have the full fair market value of the gifted property available to produce life income for you.
In addition, your gift will generate a charitable income tax deduction equal to the present value of your future gift. In the year of your gift, this deduction can be taken up to 30 percent of your adjusted gross income. Any unused part of this deduction can be carried forward and deducted from your income in the same percentage for an additional five years.
Life Income Gifts: Charitable Gift Annuities
A charitable gift annuity (CGA) is an excellent way to increase your income, reduce your taxes and make a generous future gift to Cal State East Bay at the same time. This is how it works:
You make an irrevocable transfer of cash or marketable securities to Cal State East Bay. In exchange, Cal State East Bay agrees to make fixed payments to you or others for life.
A portion of this income will be tax-free over your life expectancy and you will receive a partial income tax deduction for your gift.
In addition, the assets transferred in exchange for your CGA will be considered outside your estate for federal and state estate tax purposes.
Cal State East Bay uses the rates suggested by the American Council on Gift Annuities, which are reviewed annually and adjusted based on a variety of economic factors.
It is also possible to establish a gift annuity now, but delay receiving payments until a later date that you determine. Called a Deferred Gift Annuity, this life income gift provides a higher payment and can be an effective way of securing supplemental income during retirement.
For customized calculations on a confidential basis on how a CGA can benefit you, please call Kathleen Brady, Associate Vice President for Development at 510-885-3183 or email at firstname.lastname@example.org.
Benefits of a Life Income Gift
- No Capital Gains
No capital gains tax will be due when the appreciated asset is sold, leaving the entire principal amount available to produce income.
- Enhanced Income
Once the appreciated asset is sold, the tax-free proceeds can be reinvested into a portfolio that can be focused on producing income.
- Income Tax Savings
You will receive a current income tax deduction equal to the value of your future gift to Cal State East Bay discounted to present value.
- Estate Tax Savings
Assets transferred into the gift vehicle are considered outside your estate and are therefore not subject to estate taxation.
- Asset Diversification
The property transferred into the gift vehicle is reinvested into a diversified portfolio.
- Relief from Management Responsibility
You will no longer have the burden of managing an asset, such as real estate, but will instead simply receive periodic distributions.
- Significant Future Support for Cal State East Bay
Planned gifts allow you to give more generously than you might have thought possible, due to the tax and financial benefits.