Fall season on University of Chicago campus

University of Chicago campus

FAQ: Charitable gift annuities v. charitable remainder trusts

The Office of Gift Planning answers common questions about life income gifts.

You can make a gift to the University and increase your future income at the same time. In both charitable gift annuities (CGAs) and charitable remainder trusts (CRTs), the donor transfers assets to the University in exchange for quarterly income payments. The donor receives a tax deduction and other potential tax savings. The remaining funds transfer to the University upon the death of the final income beneficiary.

What are the differences between a CGA and a CRT?

CGAs offer the security of fixed payments to one or two annuitants, guaranteed by the University. CRTs provide variable payments to beneficiaries but can offer a greater return with income for a lifetime, a term of years, or a combination of the two.

How much is needed to fund these gifts?

A minimum gift of $10,000 funds a CGA. A CRT requires $100,000.

What assets can I use to fund them?

You may use cash or securities (stocks, bonds, mutual funds). Repeat CGAs are easy to do; you may add assets to a CRT at any time. Sometimes CRTs can be funded with closely held stock or real estate. Both vehicles can turn low-yield assets into income-producing ones.

How is the income amount determined?

CGA payout rates are determined by the annuitant’s age, and payments are fixed at the time of establishment. CRT rates are negotiated with the donor, typically around 5 percent. Payments vary with the annual value of the trust.

When will I receive the income?

Income is paid quarterly after the gift is established. To receive payments, you must be at least 55. Payments from a flexible or deferred CGA can be delayed until a future date, such as retirement, which can result in a larger tax deduction and a higher payout rate.

If I don’t need the income, can I fund a CGA or CRT to benefit someone else?

You can direct payments toward a spouse, child, or other beneficiary.

Estimate the benefits of a life income gift.