Question

A local university has approached the Dions about making a charitable contribution. After discussing the possibility of making a donation, Marcel and Clio have decided that they are willing to make the donation if they can receive an immediate tax deduction and an income stream for life based on a fixed percentage of the amount donated (valued annually). Marcel and Clio would also like to have the ability to increase their donation amount in future years. Which of the following charitable giving alternatives best serves the Dions’ desires?

a.A charitable remainder unitrust.

b.A charitable remainder annuity trust.

c.A pooled income fund.

d.A grantor retained annuity trust.

Answer 1

Option C. Pooled Income Fund is the answer

Explanation:

Under Pooled Income fund,donors may qualify for an immediate partial tax deduction, based on their life expectancy and anticipated income stream, but they must pay income tax on the income stream from the fund each year.

The fund invests the contributions to provide dividends for the fund contributors as a fixed percentage of the amount donated.

Therefore, Pooled Income Fund will best serves the Dion's desires.