A Life Income Plan is an arrangement for making an irrevocable gift to Central Maine Healthcare for the benefit of Central Maine Medical Center, with the provision that the annual income be paid to the donor and/or other designated beneficiaries for life. Upon the death of the last beneficiary, the assets are passed to Central Maine Healthcare for the benefit of Central Maine Medical Center for the specified purpose, if any, stipulated by the donor.
Several types of life income gifts are described below. Each can be adapted to the donor's unique personal circumstances, through a range of variations.
Charitable Gift Annuity
This is a contract between Central Maine Healthcare and the donor, guaranteeing the payment of a fixed annual income to the donor for his or her life (and the life of, at most, one other beneficiary). The Gift Annuity has an attractive additional feature in that a portion of each income payment is treated by the IRS as non-taxable return of the donor's principle. The minimum contribution for a Gift Annuity is $5,000. Donors interested in assuring only the future payment of guaranteed, fixed income will receive a greater charitable deduction by establishing a "deferred gift annuity."
Charitable Remainder Unitrust
This is an individual trust, which pays the donor a fixed percentage of trust principle each year; the dollar amount will therefore fluctuate from year to year with the market value of the trust. The trust is valued quarterly, semi-annually or annually, according to the donor's preference for receiving income payments. The annual payout percentage is set at the discretion of the donor, but must be at least 5%. Because unitrusts require private financial management, the minimum contribution level is normally $100,000.
Charitable Remainder Annuity Trust
This type of life income gift is identical to the unitrust, except that the income payment is a fixed dollar amount rather than a fixed percentage of the trust assets.
Real Estate Remainder Interest
If a person owns a residence or farm that the person's children will not eventually want to occupy or manage, the person can deed (all or any part of) the property to Central Maine Healthcare, retaining the right to occupancy and all income from the property during the lifetimes of the person and the person's spouse. In so doing, the person would be entitled to an immediate income tax deduction for the value of the remainder interest, the amount depending on the person's age(s) and the value of the improvements and future depreciation. Vacation homes may be gifted under such an arrangement, as well as principal residences. By gifting such a remainder interest, the property is also freed from one's estate thereby lowering estate taxes.
