Your Giving Lives On With Charitable Remainder Trusts
If you are interested in supporting us, you can employ a gift technique that also benefits you personally. A charitable remainder trust (CRT) provides three personal benefits:
- improved income for yourself and/or for others
- current income tax savings from a charitable deduction
- avoidance of up-front capital gains taxes if funded with appreciated assets otherwise to be sold.
How CRTs Work
There are two basic types of CRTs—the annuity trust and the unitrust. These two are similar in many respects. If you are the donor:
- The trust must first pay income to you and any other individual you name, typically for your lifetime; at termination, the balance of the trust assets must pass to a qualified tax-exempt organizations like us.
- You receive an income tax charitable deduction for a portion of the fair market value of the assets placed in the trust. This depends on the number and ages of the income beneficiaries, the payout rate, the frequency of payments and the applicable charitable midterm federal rate. The income tax savings reduce the net cost of your gift and improve your effective rate of return.
- When you use appreciated securities to fund the trust, you are not taxed up-front on the capital gain. And your deduction for a gift funded with long-term securities is based in part on their full fair market value—not their lower cost basis.
How Your Income Is Determined
When you create a CRT, you choose the payout rate you would like to receive. Here's how this applies to the two basic types of trusts.
Annuity trust. You receive a fixed sum each year.
Unitrust. You receive variable payments each year determined by multiplying the fair market value of the trust assets, as revalued each year, by a fixed percentage.
Income Tax Benefits Are Included
When you itemize your deductions, you get an income tax charitable deduction in the year you create an annuity trust or unitrust. The deduction is for the value of our right to receive the trust remainder after your lifetime.
Our Charitable Benefit
Your interest in the charitable remainder trust reaps substantial benefits for you and your heirs. At the same time, you enjoy the heartwarming satisfaction of your commitment to our future work. Contact Kelly Sachse at 414-266-6121 888-543-7233 or ksachse@chw.org to help you and your advisors pick the plan that best fits your personal situation. There is no obligation, of course.
Copyright © The Stelter Company, All rights reserved.
The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to income tax apply to federal taxes only. Federal estate tax, state income/estate taxes or state law may impact your results.
