Annual Annuity (Existing Trust)

The name and function of this prompt depends on whether you select Unitrust or Annuity.

If you select Annuity – Annual Annuity is the prompt name. Enter the amount of income that will be received from the trust each year. The dollar amount must be at least 5% of the initial trust value, and a trust cannot pay an annuity of more than 50% of the trust value. If the probable amount left for the charity is less than 5%, then there will not be a charitable deduction. The clients' ages, the 7520 rate, and the annuity payout determine whether or not the deduction meets the 5% probability test.

The value of the charitable remainder interest must be worth at least 10% of the value of the assets transferred to the trust.

For calculation purposes, the program treats the annuity payout as an income stream. However, the program also assumes that the client receives the payout at the end of the year. If the trust is a GRAT or QPRT, the program assumes that the client receives income from the trust either throughout that individual’s lifetime or at the end of the specified term. If the trust is a CRT, the program assumes the charity receives the trust balance.

If you select Unitrust – Pct of Annual Balance is the prompt name.