Low rates are double-edged, creating opportunities for borrowers but eroding income for savers.

However, charitable gift planning with Colorado School of Mines can help our supporters cope with or even take advantage of low rates in a number of ways. Consider the following possibilities:

1. Establish gift annuity to increase current cash flow. John and Martha M., both 75 years old, have seen their income from savings accounts decline substantially. In order to increase their return, they contribute $50,000 in cash to establish a charitable gift annuity.
   
   In return for their gift, they’ll receive fixed payments totaling $3500 per year (7%) so long as either of them survives—much higher than the rate they earn on their cash savings. Even better, more than 60% of the annuity payments will be free of income taxes, increasing their after-tax return to nearly 10%. John and Martha will also receive a charitable deduction of $13,842 in the year that they establish the annuity.
   
   
2. Relinquish income interest to generate charitable deduction. Bob and Kathryn W., both 75 years old, established a charitable remainder trust with Mines some years ago. It now pays them about $28,000 per year. They don’t need the income and in fact dislike paying income taxes on it.
   
   Consequently, they decide to reassign their remaining income interest from the trust to Mines. Because of low interest rates that factor into IRS gift calculations, the reassignment generates a sizeable charitable deduction of nearly $250,000.
   
   
3. Establish lead trust for tax-free transfer to heirs. Gerald and Rose T., both 80 years old, have accumulated an estate of $4 million. They are concerned about estate taxes and do not wish to leave their entire estate to their heirs all at once. In consultation with Mines and their advisors, they use $1,000,000 to establish a charitable lead trust.
   
   The trust will make annual payments of $70,000 to Mines for 21 years, after which the principal will be released back to their heirs. They anticipate that the amount released from the trust will make a good "follow-up" to the other $3 million that their heirs can expect to receive when Gerald and Rose pass away.

Because of low interest rates that factor into IRS gift calculations, no estate or gift tax will be due on the assets transferred to Gerald and Rose’s heirs through the lead trust.