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A New Wealth Management Dimension
Our Program provides nonprofits and advisors a centralized source for the design of a specialized tax-exempt trust on a turnkey basis. The Program allows the trustees the ability, within specific legal limitations, to manage income and taxation as well as provide investment allocation of assets contributed using a variable annuity contract as the primary trust investment vehicle.
In compliance with IRC 664 and substantiated by several private letter rulings, a properly drafted trust document which includes “net income with make-up provisions” and specific “income” definitions allows for these special features.
Income and/or gain of invested assets within the annuity contract are not accounted for as income and/or gain within the trust itself until such income or gain is distributed from the annuity contract into the trust. Thus allowing for a build-up of income and gain for future use in trust distribution planning.
Trust administration, valuation, accounting, tax preparation and planning are coordinated by our firm on an ongoing basis.
The trustees can be named as lifetime beneficiaries and have the revocable right to name as ultimate future beneficiaries one or more charities, a private family foundation or a donor advised fund.
Selected assets are transferred to the trust, liquidated and used to purchase one or more annuity contracts. Funds are then allocated within the sub-accounts available within the respective annuity contacts in order to satisfy asset allocation objectives. Based upon the amount contributed and other specific factors, a tax deduction is provided to the donors of the trust.
This tax deduction is limited in use for offsetting income of the donors each year by a percentage (30% for non-cash contributions or 50% for cash contributions) of adjusted gross income of the donor(s) and is limited to a five year carry-over.
In summary, an assortment of both charitable and personal financial objectives can be achieved through the proper design of a ManagedIncomeTM Trust
Initial Contribution of $1,000,000
Investments — Income — Taxation — Giving
Generates a substantial income tax deductionAllows for enhanced control of income and taxationCan enhance investment diversificationCan provide supplemental retirement incomeMinimizes capital gains taxation on appreciated assets
No contribution limitationsCan satisfy charitable desiresCan provide for asset protectionCan provide tax deferred asset growthCan eliminate estate taxation on contributed assets
“The Limited Use and Control of contributed assets by the Trustees while living and at death”.