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The Charitable Remainder Annuity Trust

The annuity trust provides for payment of a fixed dollar amount—annually or at more frequent intervals—to the designated beneficiary(ies).

The amount must equal at least 5 percent of the initial fair-market value of the trust. At the death of the last beneficiary, the trust principal is distributed to Wake Forest.

In addition to the income you will receive from the trust, you will also be entitled to a charitable income-tax deduction for the value of our remainder interest in the trust assets.

For example, George and Mary Carlson purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. Now that they are both aged 65, they would like to augment their retirement income. To do this, they transfer the stock to a charitable remainder annuity trust with a 6 percent payout rate.

In the first year, they will receive a $6,000 payment—four times the dividends they have been receiving—and they will continue to receive $6,000 each year for the rest of their lives. Moreover, they avoid tax on their profit in the stock, and they receive an income-tax deduction of about $28,000. In their 33 percent tax bracket, this saves them $9,240 in income taxes (33 percent of $28,000).

When the last beneficiary dies, the annuity trust assets will benefit any Wake Forest program you choose.

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