Life Income Gift
Life Income gifts offer a range of estate planning options. When you arrange a Life Income gift to Bay Area Legal Services, you can receive an immediate income tax deduction based on the calculated present value of the future gift, and BALS likewise receives an immediate benefit. A Life Income gift allows you to give an asset to BALS yet retain use of the asset during your lifetime. These split-interest gifts are specifically approved in the US Tax Code.
Please Note: These gifts are irrevocable. You should consult with a tax and legal advisor before making a life income gift.
There are four general types of Life Income gifts:
- Gift Annuity. A Charitable Gift Annuity is a contract between a donor and the charity. In exchange for your gift of cash or marketable securities to BALS, we agree to pay you a fixed amount annually for your lifetime. The transfer is part gift and part purchase of an annuity. The rate of return is competitive and the payments are guaranteed for life. (BALS uses the charitable gift annuity rates recommended by the American Council on Gift Annuities.)
Charitable Gift annuities can include joint and survivor annuities, and can be arranged to make payments for the lifetime of two people. You may defer your annuity payments, and BALS will begin paying your annuity starting on the date you specify. You will receive an immediate income tax deduction for a portion of the gift, and BALS will have an immediate benefit from the receipt of your gift.
- Charitable Remainder Trust. A trust is a legal agreement that specifies how the assets in the trust will be managed. When you establish a Charitable Remainder Trust, you will place assets in the trust and will receive periodic payments for your lifetime. The assets then pass to BALS upon your death. You will receive an immediate tax deduction for a portion of the gift when the trust is funded.
There are two types of charitable remainder trusts: the unitrust and the annuity trust. With a unitrust, the income received fluctuates annually with the fair market value of the trust. With an annuity trust, the income payments are fixed and determined when the gift is made. Charitable remainder trusts require a trustee, who manages the trust and ensures that distributions and tax filings are made.
- Pooled Income Fund. You may participate in a commercial Pooled Income Fund and name BALS as the charitable beneficiary. With a Pooled Income Fund, you will contribute to the pooled investment account and receive a pro rata share of the income each year. Upon your death, your share passes to BALS. You will receive an immediate partial tax deduction when a contribution is made to the Pooled Income Fund
- Remainder Interest. You may transfer the ownership of real estate to BALS and retain a life estate. When the gift is made, you will receive an immediate income tax deduction for the calculated remainder value of the donated property. You would continue to pay for the insurance, taxes, upkeep, and other expenses. Note: this type of gift should not be used if you wish to maintain the ability to mortgage or sell the property.
BALS makes no claims regarding the accuracy of the above information or the tax consequences if you rely on it. Please consult with your tax, legal, or financial planning advisor.