Life Income Plan

A type of philanthropic strategy where cash or property is transferred into a pooled income fund sponsored by the receiving charity in return for a lifetime of guaranteed income for the donor. The charity assumes full control and ownership of the donated assets upon the donor's death or upon the death of the last named beneficiary.

Life income plans are generally appropriate for wealthy investors with large estates seeking an immediate tax deduction, although some charities specify a minimum initial contribution of as little as $5,000.

In most life-income-plan arrangements, the charity will determine how much of a present tax deduction the donor is entitled to and notify the donor accordingly. Life income plans are similar in nature to charitable remainder trusts, except that a pooled income fund is used for the former. The pooled income fund usually consists of a portfolio of fixed-income securities, and the trustees of such funds manage them to provide income and preserve or increase the principal.