A pooled income fund is an irrevocable trust established and maintained by a public charity to which many donors can make contributions. Generally, it works as follows:
" Contributions received from individual donors are commingled for investment purposes.
" Each year, the donor (or the donor's designated income beneficiary) receives a distribution in an amount equal to the donor's pro rata share of the fund's net investment income.
" At the death of the income beneficiary, the portion of the fund attributable to the donor's gift is severed from the fund and distributed to a charity or charities of the donor's choice.
In the year of contribution, the donor may be entitled to an income tax charitable deduction.
Contributions are treated as gifts to a public charity for purposes of the income tax deductibility limitations.
The pooled income fund may accept appreciated assets from a donor and sell the appreciated property without the donor incurring immediate recognition of capital gains. If the property is encumbered by debt, other rules apply. The gift to a pooled income fund qualifies for the charitable gift and estate tax deduction. However, gift or estate tax may be incurred if the income interest is payable to someone other than the donor or the donor's spouse.
Maryland Pooled Income Fund with Declaration of Trust by Charitable Organization is a financial tool offered by charitable organizations in the state of Maryland. This fund allows individuals to make charitable contributions while still benefiting from the income generated by their donated assets. The Maryland Pooled Income Fund operates through a Declaration of Trust, which is a legal document that outlines the terms and conditions associated with the fund. It establishes the framework for the management and distribution of the fund's assets. By contributing to a Maryland Pooled Income Fund, donors can receive immediate charitable tax deductions while also receiving a stream of income from their donated assets for their lifetime. After the donor's passing, the remaining assets in the fund are used to support the charitable purposes specified by the fund. There are different types of Maryland Pooled Income Funds with Declaration of Trust, each offering unique features and benefits: 1. Charitable Remainder Unit rust (CUT): This type of Pooled Income Fund allows the donor to receive income from the fund based on a fixed percentage of the trust assets' value, which is revalued annually. The income fluctuates depending on the performance of the assets, providing the potential for growth. 2. Charitable Remainder Annuity Trust (CAT): In this type of Pooled Income Fund, the donor receives a fixed annual income from the fund, which is predetermined at the time of the donation. The income remains constant throughout the donor's lifetime, regardless of the trust assets' performance. 3. Charitable Gift Annuity (CGA): While technically not a Pooled Income Fund, a CGA is another option for individuals looking to make charitable contributions and receive income. With a CGA, individuals make a donation to a charitable organization in exchange for a fixed income stream for life. A CGA is a contract between the donor and the charity, providing the simplicity of a regular annuity. In summary, the Maryland Pooled Income Fund with Declaration of Trust by Charitable Organization is a valuable financial tool for individuals looking to support charitable causes while still benefiting from the income generated by their donated assets. The different types of Pooled Income Funds allow donors to choose the option that best suits their financial goals and preferences. By utilizing these funds, individuals can leave a lasting impact on charitable organizations in Maryland.
