Charitable Gift Types

Remainderman

The remainderman is the recipient of a trust's proceeds when the trust terminates.

In the context of planned giving, remainderman usually refers to the charity that will receive the final distribution from a charitable remainder trust or pooled income fund. Technically speaking, gift annuity and retained life estate gifts do not have a remainderman because the charity takes possession of the gift assets immediately.

Remainder Interest

A charity's remainder interest in a planned gift equals the present value of the promise to distribute the remaining principal of the planned gift when it terminates.

In the case of life income gifts, such as a gift annuity or a charitable remainder unitrust, the charity owns the remainder interest in the gift.  In the case of a lead trust, individuals named by the donor own the remainder interest in the gift.

Remainder Factor

The remainder factor is the fraction of the funding amount of a planned gift that is considered a charitable contribution, expressed as a decimal. The remainder factor multiplied by the funding amount equals the value of the charitable contribution.

For example, if the remainder factor for a charitable remainder unitrust is .24561 and the unitrust is funded with $100,000, the value of the charitable contribution is .24561 x $100,000 or $24,561.

Reasonably Commensurate Value (RCV)

Reasonably commensurate value (RCV) is a measure of the present value of a gift annuity's payments at the time the gift annuity is funded.  As of this writing, North Dakota, Oregon, Tennessee, and Washington are the only states that require a gift annuity's RCV to appear in the annuity agreement. California also used to impose this requirement, but legislation passed in August 2005 that removed this requirement, effective 1/1/2006. 

North Dakota, Oregon, Tennessee, and Washington all accept the Investment in Contract amount as the RCV.

Publication 1459

Publication 1459 is a book of federal tables used to compute retained life estate deductions. The edition that contains tables based on Table2000CM. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Gimel. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1458

Publication 1458 is a book of federal tables used to compute charitable remainder unitrust deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3B. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Beta. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1457

Publication 1457 is a book of federal tables used to compute charitable remainder annuity trust and gift annuity deductions and pooled income fund deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3A. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Aleph. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Pooled Income Fund Yearly Rate of Return

The deduction computation for a gift to a pooled income fund depends on the fund's valuation rate.  This valuation rate, in turn, is determined by the fund's historic yearly rate of return once the fund is three or more taxable years old.  The valuation rate for a gift equals the highest of the fund's yearly rates of return in each of the three calendar years prior to the gift.

The valuation rate for a fund that is less than three taxable years old is mandated by the IRS and is based on the average of the monthly IRS discount rate over the past three calendar years.