A charitable remainder annuity trust is an excellent gift plan for a donor who has highly appreciated securities and also is interested in receiving a fixed income stream. A donor places a one-time contribution of cash or appreciated assets (i.e. stocks, bonds, etc.) into a charitable remainder annuity trust. The trust then sells the assets and reinvests the proceeds, mainly into conservative vehicles, such as Treasury Notes or Government bonds. The beneficiary receives a fixed dollar annual income payment for life. When the trust terminates, The Rockefeller University receives the remaining principal.

Example

Mrs. Emerson is 65 years old and is in the 39.1% income tax bracket. She has stock that would be subject to 20% capital gains tax if she sold it outright. Her stock has a current market value of $100,000 and pays a total cash dividend of $2,000 (two percent). She purchased the stock many years ago for $20,000. Mrs. Emerson would like a higher return, but she has been reluctant to sell the stock because of the capital gains tax that would be due.

In 2001, Mrs. Emerson, who has long supported the scientific research programs at The Rockefeller University, places the stock in a charitable remainder annuity trust. At the time the trust is created, Mrs. Emerson stipulates that she would like to receive annually for life six percent of the original trust value ($6,000 fixed annual income). When the trust terminates, after Mrs. Emerson's lifetime, The Rockefeller University receives the remaining principal of approximately $100,000 to support its programs.

Benefits to Donor

• Mrs. Emerson receives an immediate income tax deduction of $41,310.*
• She has increased her annual income stream from $2,000 (dividend payment) to $6,000 (trust payout).
• She has removed the stock from her estate, avoiding possible estate taxes on the assets.
• Mrs. Emerson has created a legacy to continue her support of scientific research through a generous gift of $100,000 to The Rockefeller University.

* The calculations are for illustrative purposes only. Actual benefits may vary depending on the age of the beneficiary, the IRS discount rate, and the timing of the gift. The gift to The Rockefeller University assumes no appreciation or invasion of principal.

Please call Ms. Vickie Lister, director of planned giving, at (212) 327-8658 to learn more about charitable remainder annuity trusts. The Rockefeller University recommends that you consult with your legal and financial advisors before proceeding with any planned gift.

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