Charitable Trusts or Charitable Gift Annuities

Other Planning Giving options to consider are Charitable Lead Trusts (CLT), Charitable Remainder Trusts (CRT) or Charitable Gift Annuity (CGA).

Charitable Trusts in General

A charitable trust is a type of irrevocable trust into which assets are transferred during your lifetime. In general, you may not amend or revoke the trust during your lifetime; however, you may retain the right to change the charitable beneficiary, unless you and the charity have agreed that the trust will not permit you to change the charity. You and the charity each receive different benefits from the trust. Charitable remainder trusts and charitable lead trust differ in the timing of distributions to the trust.

Fletcher Allen will not act as trustee of a charitable trust of which it is the beneficiary. If you do not put restrictions on Fletcher Allen’s use of the funds, the assets remaining in the charitable trust at the end of its term will be designated to general operating funds and will be used at the discretion of the CEO of Fletcher Allen to meet the greatest needs of Fletcher Allen.

Charitable Remainder Trusts (CRT)

A charitable remainder trust is an irrevocable trust which makes payments to you (and your spouse, if you so desire) for your lifetime(s) or for a term of years (not to exceed 20). The amount paid to you is based on the value of the trust property each year and will fluctuate from year to year. Following your death or the term of years, the remainder would be distributed to Fletcher Allen. When the trust is established and assets are transferred to the trust, you are generally entitled to a current income tax charitable deduction based on the value of the gift to the trust less the value of the payments that you receive for the term of the trust. In other words, you receive a deduction based upon the amount that eventually passes to Fletcher Allen. The value of the assets in the charitable remainder trust is generally not included in your taxable estate at your death.

Charitable Lead Trusts (CLT)

A charitable lead trust would make payments to Fletcher Allen during your lifetime (and/or the lifetime of your spouse and/or children following your death, if you so choose) or for a term of years, with the remainder usually passing to your beneficiaries (usually members of your family, such as children) upon expiration of the trust term. The amount paid to Fletcher Allen each year is based upon the initial value of the trust and, therefore, will be a set amount each year. Depending upon the type of charitable lead trust, income generated by the trust that is paid to Fletcher Allen may or may not be taxable as income to you and you may or may not receive a current income tax charitable deduction. If you do receive a current income tax charitable deduction, it would generally be calculated as the present value (today’s dollars) of the aggregate amount to be paid to Fletcher Allen during the trust term. The value of the assets passing to your family member(s) at the end of the trust term would be reduced by the value of the interest that was paid to Fletcher Allen.

Charitable Gift Annuity (CGA)


A charitable gift annuity is a contract between a donor and Fletcher Allen which specifies the gift to be made by the donor to Fletcher Allen and the annual payments to be made by Fletcher Allen to the donor (and the donor’s spouse, if so desired). The payments are made for the donor’s lifetime and are a set amount determined by the gift annuity rate at the time of the contract, value of the gift, number of annuitants (the donor and perhaps the donor’s spouse), and the age of the donor (and his/her spouse, if appropriate). The annuity payments do not fluctuate and are not affected by the stock market or interest rates.

The minimum donation for a charitable gift annuity is $10,000. The minimum age for the donor is 55 and the minimum age for a deferred beneficiary (e.g., donor’s spouse) is 45. No more than two annuitants are permitted. Annuity payments made be made on a quarterly, semi-annual, or annual basis.

Generally, the donor is entitled to a charitable deduction based upon the value of the remaining gift passing to Fletcher Allen after the deaths of the annuitants. Often donors donate highly appreciated stock for a charitable gift annuity because (i) they don’t want to sell the stock and recognize any capital gains tax liability, and (ii) Fletcher Allen does not have to pay any capital gains tax on appreciated stock that it sells. The donor may, however, be liable for some income tax on appreciated stock if that stock is sold during the donor’s/annuitant’s lifetime.

Fletcher Allen will not accept contributions of real estate, tangible personal property (e.g., jewelry, automobiles, artwork, etc.), or other illiquid assets as a donation for a current charitable gift annuity. Fletcher Allen may accept such illiquid assets in exchange for deferred annuities provided the annuity payments do not commence for at least 5 years from the date of the gift and the value of such assets are determined in the discretion of the CEO to be reasonably certain.

Funds contributed for a charitable gift annuity will remain invested during the term of the annuity payments. When the annuity payments end, the remaining funds will be transferred to Fletcher Allen’s general investment funds or to a specific fund as designated by the donor in the annuity agreement.

Disclaimer

Any charitable gift may have significant income, gift and estate tax consequences. You should consult with your financial, tax, and legal advisors. For any questions, please contact the Fletcher Allen Health Care foundation by phone at 802-847-2887 or development@vtmednet.org.