Charitable Remainder Annuity Trust

Header Image

A charitable remainder annuity trust will provide a fixed payment to you and/or your loved ones for life or for a specific number of years. The size of the payment is determined at the time the gift is made. Donors seeking a higher payout will receive a lower current tax deduction and vice versa (within certain limits). Duke establishes annuity trusts in amounts of $100,000 and greater.

Some sample rates as of January 1, 2016
Two Beneficiaries One Beneficiary
Your Ages Payout Rate Deduction on $100,000 gift Your Age Payout Rate Deduction on $100,000 gift
75/75 5.0% $38,090 72 5.0% $46,098
80/80 6.0% $40,644 75 5.5% $48,219
85/85 6.5% $49,929 80 6.0% $55,746

If you are interested in making a gift that yields a fixed income, Duke's Office of Gift Planning can help you determine whether a charitable remainder annuity trust or a charitable gift annuity is a better fit for your particular situation. In general, a charitable remainder annuity trust may provide a more favorable tax treatment than a gift annuity if you are using highly appreciated assets.

When you establish an annuity trust, you get to decide how the remaining trust assets will ultimately be used at Duke. You receive an immediate income tax deduction for a portion of the gift, and this deduction can be used over as many as six consecutive tax years. If your gift is funded with appreciated assets, you can also reduce your capital gains liability.

Charitable remainder annuity trusts may be invested with Duke's endowment assets; however, the payout amount remains fixed. An annuity trust is backed by all of the trust's assets.

Example: Mr. White owns appreciated securities that originally cost him $30,000 and are now worth $100,000. He donates these securities to Duke to fund a charitable remainder annuity trust, naming his wife, age 75, as the life income beneficiary. The trust agreement provides for fixed annual payments to Mrs. White of 5.0% ($5,000/year) of the initial trust principal for life. Mr. White qualifies for an income tax deduction of over $52,600. There will be no capital gains tax due on the $70,000 in appreciation when the charitable remainder annuity trust sells the securities. However, part of the $5,000 annual payment to Mrs. White may be taxed as capital gains in future years. At Mrs. White’s death, the trust principal will pass to Duke for the purpose designated by Mr. White (e.g. scholarships).
Note: In similar cases, a charitable gift annuity may provide a higher payment.