The Charitable Remainder Annuity Trust
A charitable remainder annuity trust (CRAT) 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 The College of Wooster.
As an annuity trust donor, you irrevocably transfer assets,
usually cash or securities, to a trustee of your choice (for
example, The College of Wooster or a bank trust department).
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 percent 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, semiannually,
or quarterly.
When the annuity trust term ends, the trust’s principal
passes to The College of Wooster, to be used for the purpose
you designate.
Example:
You irrevocably transfer $100,000 in cash to an annuity trust
that pays 5 percent of its value each year for the lifetime benefit
of an individual, aged 72. You will qualify for a federal income-tax deduction of approximately $57,819. Your designated income
beneficiary will receive fixed payments of $5,000 each year
for life.
The charitable deduction is based on the federal interest
rate at the time of this illustration. This illustration shows
what we believe your benefits would be from a gift. You are
encouraged to confer with your accountant or attorney. A College
of Wooster staff member would be pleased to work with you.
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