If you are providing financial assistance for college expenses for a family member, you may be interested in learning about a creative way to support Baystate Health Foundation while helping your young college student.
Some donors have found that a charitable remainder trust is a great way to make a meaningful gift while generating income for themselves or someone else. Usually, donors reserve income for themselves with payments lasting for their lifetimes. However, you can design a charitable remainder trust to provide income to help with college expenses for your child or grandchild.
Advantages to you, the donor:
- Provide a secure source of income to help with college expenses
- Avoid capital gains taxes if you contribute securities or other property that have increased in value
- Opportunity to convert low-yield investments tax-free
- Secure a generous income tax deduction
- Make a meaningful contribution to Baystate Health Foundation
For example, Alice would like to provide financial support for her grandson, who is starting college next year. She could simply send money regularly and, with some careful planning, there would be no adverse tax consequences to this plan. Instead, Alice contributes $250,000 in appreciated stock (which she bought for $50,000 years ago) to a charitable remainder annuity trust, which will pay $25,000 per year for eight years – enough time for her grandson to complete graduate school – and then distribute the trust balance to support patient care at Baystate Children’s Hospital.
Alice will receive an income tax deduction this year of about $110,000 for the value of her contribution to Baystate. In addition, she will completely avoid as much as $30,000 in capital gains taxes that she would have owed if she had sold her stock.
That’s a winning combination: support for a family member, a generous contribution to Baystate Health Foundation, and significant tax savings now. Contact us to learn more about options.