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Annuity Trust
An annuity trust
distributes a fixed dollar amount each year.
An annuity trust, like a gift annuity, distributes a fixed dollar amount for your lifetime. We generally invest such trusts in U.S. Treasury bonds, so the distributions to you are nearly risk-free. This can provide a fixed-income component to the equities in the rest of your portfolio, or it may provide you with reliable funding for a particular need, or simply a welcome respite from the variations in the stock market.
Here is An Example:
"In an Uncertain Market, How Can I Avoid Risk?"
Mr. McGowan, age 85, sets up an annuity trust with stocks now valued at $100,000. He has decided that an annuity trust, with its fixed income, will fit well in his portfolio. He originally paid $25,000 for the securities. The trust payment is $5,000 a year, based on the yield of a long-term Treasury note.
The agreement entitles Mr. McGowan to claim a charitable deduction of $75,800 on his income tax returns. In the 27% federal tax bracket, his federal income tax savings will be $20,500. He also avoids any income tax on the $75,000 of capital gains realized by the trust.
Please contact us for more information on your particular situation.
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