Annual Annuity (Proposed Trust)

Enter the amount of income that you want to receive from the proposed trust each year. The dollar amount must be at least 5% of the initial trust value, and 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.

If you enter an annual annuity, the program automatically calculates the Percent of Initial Balance. You may also enter a percentage of the income that you want to receive from the trust each year; the program will calculate the annuity payout for you.

The program treats the annuity payout as an income stream for calculation purposes. However, the program also assumes that the client receives the payout at the end of the year. If the trust is a GRAT, the program assumes that the client receives income from the trust either throughout the 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.

Note: This prompt is not available if you select Unitrust.