Why Is the CRT Charitable Deduction So Much Smaller Than the Projected Remainder?
PG Calc’s PGM Anywhere offers the ability to run projections for charitable remainder trusts that provide an estimate of the long-term outcome of the gift arrangement. Based on a number of input assumptions, the gift planning professional can give the prospective donor a reasonable idea of what is possible over time. None of the future numbers are guaranteed, of course, but modeling can serve as a useful tool in framing the overall picture.
While the long-range estimates can be helpful for a donor – and for his or her advisors – the process sometimes results in a number of questions. One of the most consequential questions we hear regarding the trust projections in PGM Anywhere is why the charitable deduction is so much smaller than the projected remainder amount. We generally refer to the deduction as the estimated value of the gift to the charity, but that is also how we explain the projected remainder amount. In some cases, the two numbers can be worlds apart. If they represent essentially the same concept, how can we see two numbers so dramatically different? Let’s take a look at what is behind the numbers.
From the Blog: BDQ #12 – What Is a Net Income CRUT (and Why Do We Need So Many Letters)?
It’s Getting Better All the Time! Illinois Passes RIFT Law
PGM Anywhere CGA Agreements Are as Specific as a Fluffernutter Sandwich
Pay Attention to That Postmark
Fee-for-Calcs Are Now One and Done
Planned Giving Practitioners Rolled up Their Sleeves for Hands-on Training in Boston
Training FOMO? Join Us for an In-Person Training Before the CGP National Conference in New Orleans
PG Calc Free Webinar: QCDs Q&A
Every week PG Calc’s Client Service Advisors field questions about qualified charitable deduction (QCD) gifts. In this interactive session, the Client Service Advisors will present what every gift office should know about outright and life income QCD gifts. They will then answer questions from the live audience about QCDs. Come meet the Client Service team and get your QCD questions answered, from QCD gift dates to state registration requirements.
Whether you use the Tools feature in PGM Anywhere to calculate Life Expectancy or the Present Value of a Bequest, these calculations allow for a choice of mortality tables. The mortality tables are not listed chronologically, or alphabetically, but from lowest mortality rate (longer life span) to highest mortality rate (shorter life span). For example, the life expectancy of an annuitant born on 12/15/1947 would be 14 years using 2010CM and 10.8 years using Table LN.
The 2012 IAR table is the most conservative table in PGM Anywhere and will result in the lowest predicted mortality and therefore a longer life expectancy and the lowest present value of the future bequest. Table LN will result in the highest predicted mortality and therefore a shorter life expectancy and the highest present value of the future bequest.
The 2012 IAR, which replaced the Annuity 2000, is used to calculate state reserves for gift annuities. The 1983 Basic chart is still used to calculate how long gift annuity payments will include a tax-free portion and a capital gain portion, as applicable. The remaining mortality tables are used for calculating the federal charitable tax deduction for life income plans and other split-interest gifts based on the date of gift.
When running illustrations in PGM Anywhere, the software automatically uses the mortality table required under IRC Code §7520 based on the date of the gift. As new mortality tables are introduced every 10 years or so, there is often a period of time where the new mortality table or the expiring mortality table can be used. When entering certain gift dates in the PGM AnywhereDate-Lives-Term section, a choice of mortality tables will appear. For example a gift date of 12/15/2019:
Which mortality table should you choose? Selecting the mortality table that is consistent with your organization is important. The conservative option will predict a longer life expectancy for the donor with the remainder or bequest expected to be received later in the future. The less conservative option may accelerate the expected receipt date for a remainder or bequest.
Contact Client Services at 888-474-2252 or support@pgcalc.com if you have any questions.
From the Blog: BDQ #12 – What Is a Net Income CRUT (and Why Do We Need So Many Letters)?
If you’ve spent more than five minutes around planned giving, you’ve probably noticed our love affair with acronyms. CRATs, CRUTs, NIMCRUTs, NICRUTs, Flip CRUTs – it sounds less like charitable giving and more like a bowl of alphabet soup served by an angry robot.
Let’s consider a question that trips up donors, fundraisers, and even seasoned financial planners alike: What on earth is a Net Income Charitable Remainder Unitrust (NICRUT) – or its fraternal twin a NIMCRUT for that matter – and how does it differ from a Standard CRUT or a CRAT? Read the blog post . . .
It’s Getting Better All the Time! Illinois Passes RIFT Law
In late June, Illinois became the sixth state in the past two years to pass a RIFT law that will make it easier for charities to collect beneficiary proceeds from retirement accounts, investment accounts, insurance policies, and any other non-probate transfer on death accounts. The Illinois law will become effective on January 1, 2027. The other states with similar laws are Tennessee, Nebraska, Iowa, Indiana, and Colorado. Efforts to pass RIFT laws in other states, including California and North Carolina, are ongoing, as well as work to pass a federal RIFT law.
Anecdotal evidence suggests that these laws are working as intended: charities in the five states with RIFT laws in effect are receiving beneficiary proceeds in a timely fashion without providing personal information or opening a new account with the administrator.
The National Association of Charitable Gift Planners (CGP) maintains a great resource on this issue here.
PGM Anywhere CGA Agreements Are as Specific as a Fluffernutter Sandwich
PG Calc headquarters is in Massachusetts, and almost annually someone introduces legislation to make our state sandwich the Fluffernutter. This nougaty combination of white bread, peanut butter, and marshmallow fluff is to Massachusetts what the Italian beef sandwich is to Chicago. How can these two wildly different treats both qualify as sandwiches? Because they operate on the same principle: something delicious served between two slices of bread.
The gift annuity agreements approved for use in each of the 50 states are similarly specific; they each have common elements as well as specific “flavors.” For instance, Florida requires the first line of a gift annuity agreement be preceded by a notice to the donor that the annuity is not issued by an insurance company. Illinois has no similar preamble. Hawaii’s preamble reminds donors they are not protected by any state guaranty fund. Among its many requirements, New York expects a form number to appear in the lower lefthand corner of each page of their gift annuity agreements. California requires a donor notice just above the signature line informing the donor that the state will regulate the annuity and that the annuity payments are not guaranteed by the state. You get the idea.
Luckily, all 50 agreements, showcasing each state’s unique ingredients, are available in PGM Anywhere. To pick one of these 50 flavors, follow these steps:
Select Gift Options, then select Gift Annuity, Deferred Gift Annuity, Flexible Gift Annuity, or Commuted Gift Annuity, as appropriate.
Select Presentations > Narratives > Gift Annuity Agreement.
When asked for the “Donor state of legal residence,” select the donor’s state in the drop down menu.
Remember, unless your charity has taken the legal position that all your gift annuities are issued under the laws of your charity’s home state, it is the donor’s state of residence on the date of gift that governs the state selection for the life of the annuity. This is true even if the donor is not an annuitant or moves to another state after making the gift.
And if you’ve never had a Fluffernutter, Massachusetts celebrates this treat on September 19th, so you have plenty of time to assemble your ingredients. Contact Client Services at 888-474-2252 or support@pgcalc.com if you have any questions (or want to share your Fluffernutter).
Pay Attention to That Postmark
This is reminder that the United States Postal Service announced in 2025 that postmarks will not be automatically applied at retail post office locations but instead at the central processing facilities. This change means that the postmark may not be applied for two or three days after the envelope is dropped off at the U.S. post office. If timing is important, a donor can request a manual postmark on the envelope from a postal clerk at the USPS counter.
How does this affect charities and donors? Donors need to be aware of the timing when mailing in year-end gifts in December. The postmark needs to be dated on or before December 31 for the gift date to occur in the current calendar year. Donors should plan to allow time for checks from individual retirement accounts (IRAs) to clear and funds to be debited from the IRA account by December 31 to qualify for qualified charitable distribution (QCD) and satisfy the required minimum distribution (RMD).
What happens when a donation check arrives via U.S. mail and there is no postmark on the envelope? What is the gift date? The date on the check? The date on the cover letter? The date of receipt by the charity? Unless the donor has proof of when the check was delivered to the USPS, such as a receipt, using the later date when the check was received may be the safest option.
Fee-for-Calcs Are Now One and Done
PG Calc clients with new or slow-growing charitable gift annuity (CGA) programs often use PG Calc’s Fee-for-Calcs program instead of PGM Anywhere. With this service, PG Calc’s Client Service Advisors create proposals, run calculations, or draft gift agreements using our PGM Anywhere software for the client. On August 1st we made two significant changes to this program.
Instead of paying $150 for a gift proposal and an additional $100 if you need PG Calc to draft the gift annuity agreement, Fee-for-Calcs is now a flat $200 for all documents related to a single gift. This includes the gift proposal, actuarials chart, taxation of gift annuity payments chart, IRS discount rate election forms, and the federally mandated gift annuity disclosure agreement.
The second change to this program is that clients now order Fee-for-Calcs through our website, pay with a credit card, and immediately receive an electronic intake form. Completing the intake form electronically allows Client Service Advisors to process requests more quickly.
Whether you need a QCD CGA agreement drafted for you, or need the charitable deduction (non-charitable interest) for the voluntary severance of a trust, Client Service Advisors can assist you through the Fee-for-Calcs program. If you have PGM Anywhere already, Client Service Advisors can walk you through how to do these calculations yourself for no charge.
To learn more about Fee-for-Calcs, or to order the service, please visit our website here:
Planned Giving Practitioners Rolled up Their Sleeves for Hands-on Training in Boston
Our Client Services team of advisors recently hosted back-to-back Gift Planning with PGM Anywhere training sessions in Boston – Introductory and Advanced. Attendees from a variety of nonprofit missions (higher and secondary education, hospitals, veterans, and humanitarian aid) expanded their planned giving knowledge and learned how to model and discuss a variety of strategies – from CGA's to Lead Trusts – to help their donors and institutions maximize their philanthropic impact.
Training FOMO? Join Us for an In-Person Training Before the CGP National Conference in New Orleans
When: Wednesday, October 14, 9:00 am - 4:00 pm CT Where: New Orleans Marriott, 555 Canal Street, New Orleans, LA, 70130
This full-day seminar explores gift planning beyond the basics. We will review advanced gift planning techniques including retained life estates, charitable lead trusts, and estate planning models using the flexible functionality of PGM Anywhere.
