Charitable Gift Types

Generation skipping transfer tax is a federal transfer tax that is assessed on an individual who transfers assets to a "skip person" during life or by will. This tax is assessed in addition to gift or estate tax. Its purpose is to prevent donors from avoiding transfer taxation in one generation by giving assets directly to the next generation.

The four tiers of income are IRS tax reporting rules that dictate the order in which a charitable remainder trust must distribute the four types of income when fulfilling payments to its income beneficiaries.

A flip charitable remainder unitrust with a makeup provision ("unitrust”) is a gift plan defined by federal tax law that allows a donor to provide income to herself and/or others while making a generous gift to charity. The income may continue for the lifetimes of the beneficiaries, a fixed term of not more than 20 years, or a combination of the two.

A flip charitable remainder unitrust ("unitrust") is a gift plan defined by federal tax law that allows a donor to provide income to herself and/or others while making a generous gift to charity. The income may continue for the lifetimes of the beneficiaries, a fixed term of not more than 20 years, or a combination of the two.

A flexible gift annuity is a simple contract between the donor and the charity. In exchange for a irrevocable gift of cash, securities, or other assets, the charity agrees to pay one or two annuitants a fixed sum each year for life, with payments starting at least one year after the gift. The annuitants may elect to start receiving payments on any one of a range of dates, such as June 30th of any year from 2005 - 2025. These dates and their corresponding payment amounts must be listed in the agreement. The flexibility to choose when payments start is appealing to annuitants who at the time of the gift are not sure when they will want to start receiving income.

The 5% probability test is a test described in Revenue Ruling 77-374 that requires all charitable remainder annuity trusts (CRAT) that will make payments for one or more lifetimes to have less than a 5% chance of corpus exhaustion. The test is conducted using the same facts used to compute the provisional charitable deduction for the gift.

A retained life estate plus charitable gift annuity combines two gift arrangements. The arrangements allow a donor to use some of the value of her home or farm to fund a plan that will make payments to her or others for life.

A retained life estate is a gift plan defined by federal tax law that allows an individual to donate her home or farm to a charity while retaining the right to live in it for the rest of her life.

The remainderman is the recipient of a trust's proceeds when the trust terminates.

In the context of planned giving, remainderman usually refers to the charity that will receive the final distribution from a charitable remainder trust or pooled income fund. Technically speaking, gift annuity and retained life estate gifts do not have a remainderman because the charity takes possession of the gift assets immediately.

A charity's remainder interest in a planned gift equals the present value of the promise to distribute the remaining principal of the planned gift when it terminates.

In the case of life income gifts, such as a gift annuity or a charitable remainder unitrust, the charity owns the remainder interest in the gift.  In the case of a lead trust, individuals named by the donor own the remainder interest in the gift.