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Gifting Options - Planned Giving - Life Income Gifts

Life income gifts involve the irrevocable transfer of assets in exchange for income for life (or a term of years in some cases) for one or more beneficiaries. Only after the passing of the last beneficiary are the remaining proceeds used for the purpose the donor designated. The NC State Engineering Foundation offers two types of charitable remainder trusts (the annuity trust and the unitrust ) and two types of charitable gift annuities (one with payments that start now and a deferred option with payments starting in the future). All of these gifts share several common characteristics:

Charitable Gift Annuity
Deferred Gift Annuity
Charitable Remainder Trusts
The Unitrust
The Annuity Trust

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Charitable Gift Annuity

The easiest and simplest form of a life income gift is the charitable gift annuity. This is a simple one and a half page contract between the donor and the NC State Engineering Foundation, whereby the Foundation guarantees to pay the donor, the donor and his or her spouse, or another beneficiary, a set sum annually for life. The payments remain the same over the lifetimes of the income beneficiaries, and often a portion of the income received is tax exempt. The interest rate paid depends on the ages, of the income beneficiaries and whether the payments are to start at once or be deferred to some point in the future. Charitable gift annuities can be funded with cash or securities. Additions are not permitted to a charitable gift annuity or a deferred gift annuity; however, a new contract can be drawn at any time.

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Deferred Gift Annuity

Deferred gift annuities can be an excellent retirement income or IRA substitute. Since the payments are deferred for at least one year, the interest rate paid will be substantially higher than for an immediate payment annuity and the charitable deduction will be larger as well. In certain circumstances, real estate can be used to fund a deferred charitable gift annuity.

Requirements to establish a charitable gift annuity or deferred gift annuity:

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Charitable Remainder Trusts

This type of irrevocable gift can provide significant future support to the ECE Department at NC State while potentially increasing the income of the beneficiary or beneficiaries. Payments will be made to the beneficiaries for either their lifetimes or for a term of years (20 is the maximum allowed by law). The donor directs how the proceeds will be used. Only at the conclusion of the trust is the College of Engineering able to use the gift for the intended purpose. There are two types of charitable remainder trusts--the unitrust trust and the annuity trust.

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The Unitrust

If your goal is to provide an income stream to yourself, your spouse or other beneficiaries and provide a hedge against inflation, then you should consider a charitable remainder unitrust . This type of charitable trust allows you to make additions to the trust principal at any time, and pays income based on a fixed percentage of the trust assets as valued each year. As the value of the trust increases, you share in that appreciation by receiving a larger income distribution.

This type of trust can be funded with cash, securities, real estate or other personal property. The donor avoids capital gains tax on the transfer to the trust thereby leaving the entire value of the gift available to be reinvested to benefit the named life beneficiary. The assets placed in the trust will not be taxable in the donor's estate as long as the beneficiaries are limited to the donor or the donor and his or her spouse.

Requirements to establish a charitable remainder trust:

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The Annuity Trust

If you would prefer to receive constant payments from your life income gift, you might consider a charitable remainder annuity trust. Like a charitable remainder unitrust , the annuity trust provides the donor with capital gains tax avoidance, immediate income tax deduction and the ability to designate how the funds will ultimately be used by the College of Engineering. However, unlike the unitrust, the payment from an annuity trust is based on a percentage of the market value of the trust assets at the time it is funded and the payment amount never changes. Additions to the annuity trust are not allowed.

Requirements to establish a charitable remainder trust:

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