Type of Gift

Purpose

Income/Payments

Taxation

Features

Will/Revocable Trust

Direct disposition of estate after death

Assets & income fully available to donor

No limit on Estate Tax deduction for charitable gifts

May be modified at any time

Charitable Gift Annuity

Create unvarying stream of income at beneficial rates, with eventual gift

Fixed income, paid monthly, quarterly, or annually. Payments set by Rate Table

Donor’s income may be taxed at ordinary or capital gain rates or tax-free, depending on several factors

Useful for modest gifts. Income backed by HMC Endowment

Charitable Remainder Trust

Resolve issues of appreciated assets, potential for growth to meet inflation, wish to make large gift

Payout minimum is 5%. May be paid for lifetime or for a term of years.

Eligible for income tax charitable deduction. Payout may be taxed at ordinary or capital gain rate, depending on circumstances

May meet many needs: asset diversification, inflation hedge, unlock appreciation in assets

FLIP Trust

Can provide advantageous timing for converting assets

Can “flip” from payment of net income only to standard payout as defined by trust

Net income payments taxed as ordinary income, but standard payouts have variable taxation character

Most useful for funding trust with real estate, but can also be responsive to future life events

Charitable Lead Trust

To reduce estate tax liability of major assets

Income is paid to charity for defined period, then reverts to family purpose

At expiration of term, no tax consequence on appreciation during period of charitable distributions

Useful for passing major asset to family with no or low estate tax exposure

Life Insurance

To use leverage of insurance to make charitable gift

Unless policy is paid up, premiums paid by donor

Income tax deduction for portion of policy value. Future premiums may be deducted as charitable gift.

Makes good use of a policy no longer needed. May permit larger charitable gift than outright gift.

IRA/Pension Plan Residual

To avoid double-taxation on unused plan balance at death

No impact during lifetime

Removed from estate, so not included in probate calculations

Easily handled by beneficiary designation

Gift of personal residence with reservation of Life Estate

To pass a home immediately to charity upon death

Donor remains responsible for insurance and maintenance

Removed from probate estate

An irrevocable gift. Useful when there are no direct heirs.