You can use a charitable gift annuity or charitable remainder trust to create income for someone else.
Example: Setting up a Gift Annuity for Someone Else
Joel is interested in providing an income stream for his mother, age 80, as well as supporting Wheaton College.
Joel can fund a $10,000 Wheaton College gift annuity that pays an annuity rate of 6.5% (based on her age) or $650 each year for as long as she is living. Assuming that Joel funds the gift annuity with $10,000 cash, the $650 annuity amount is treated as $95 of ordinary income and $555 of tax-free income (until the end of 2029) for Joel's mother.
Joel can also claim a current Federal charitable income tax deduction in the amount of $4,783.
Joel consults his tax advisor, who concludes that while Joel is making a gift to his mother (a non-spouse) in the amount of $5,217 (the difference between his $10,000 gift and his charitable deduction of $4,783), the amount of this gift is covered by Joel's $15,000 annual gift tax exclusion amount. Thus, Joel will not incur any gift tax for this gift to his mother. The advisor endorses establishing the gift annuity, as it is providing a financial benefit to Joel's mother and to Wheaton College, as well as tax benefits to Joel.