Charitable Remainder Trusts: Getting Started
With a charitable remainder trust, you or other named individuals can receive income each year for life or a period not exceeding 20 years from assets you give to the trust you create. Payments can be either variable or a fixed amount. After the life of the named individuals or the set period of years, the balance in the trust goes to the charities of your choice.
Your Possible Benefits
- A partial charitable income tax deduction
- Potential for increased income
- Up-front capital gains tax avoidance
- Professional management of trust assets available
Choose Between Two Main Types
There are two types of charitable remainder trusts:
The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.
Example: Elizabeth, 76, owns several stocks worth $100,000 that currently pay dividends of only $2,000 a year. She decides to give these stocks to a charitable remainder annuity trust. She will qualify for a partial income tax deduction of $55,791,1 receive $5,000 a year and provide a future gift to a qualified charitable organization.
|Get your free guide on annuity trusts.|
|Calculate your possible benefits with a charitable remainder annuity trust.|
The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
Example: Larry, 65, was looking for a gift vehicle that keeps up with inflation and provides extra income during retirement. He decides to give $1 million to a unitrust that will pay him 6 percent of the trust assets each year. Larry will also qualify for a partial income tax deduction of $392,9901 and provide a future gift to a qualified charitable organization.
|Get your free guide on unitrusts.|
|Calculate your possible benefits with a charitable remainder unitrust.|
To learn more about how you can support Marshall B. Ketchum University through a trust, contact Frances Rozner at (714) 992-7832 or firstname.lastname@example.org.
1Based on annual payments and a 2.4 percent charitable midterm federal rate—deductions vary based on income earned.
Getting Started | Is This Gift Right for You? | Case Study | What If You Don't Need the Payments Right Away? | 3 Ways to Fund Your Charitable Trust | Choosing Your Trustee | How to Complete Your Gift | Action Items
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.