Charitable Remainder Annuity Trust

A charitable remainder annuity trust ("annuity trust") is a gift plan defined by federal tax law that allows you to provide income to yourself or others for life or a term of years while making a generous gift to SD Parks and Wildlife Foundation.

As an annuity trust donor, you irrevocably transfer assets, usually cash or securities, to a trustee of your choice (for example, a bank trust department). Most bank trust departments require assets of $100,000 or more to establish a charitable trust. During the trust's term, the trustee invests the trust's assets. Each year, the trustee provides a fixed dollar amount to one or more income beneficiaries named by you. The payments must be at least 5% of the trust's initial value and are made out of trust income, or trust principal if income is not adequate. Payments may be made annually, semi-annually, or quarterly.

When the annuity trust term ends, the trust's principal passes to SD Parks and Wildlife Foundation, to be used for the purpose you designate.

Example:

If you irrevocably transfer $50,000 in cash to an annuity trust that pays 5% of its initial value each year for the lifetime benefit of an individual, age 72,

Benefits include:

You will qualify for a federal income tax deduction for a significant percent of the value of the transferred assets.Â The deduction percent increases with the age of the grantor and is often as much as 50% or more of the transferred assets.Â Â The deduction also depends on the amount of annual distribution with lower percentages yielding a higher deduction.Â The deduction is limited to a percentage of your adjusted gross income, but unused deductions in the gift year can be taken in subsequent years.
The designated income beneficiary will receive fixed payments in regular quarterly, semi-annual or annual installments of at least 5% but generally less than 7% of the original asset value for life.
The grantorâ€™s estate may enjoy reduced estate taxes.
The grantor will provide generous support for the South Dakota Parks and Wildlife Foundation.

Any calculations or examples are for illustration purposes only and should not be considered legal, accounting, or other professional advice.

For more information, contact the Foundation.

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