Charitable Remainder Trusts
If you have assets that you wish to give to Bideawee, but you would like to keep the income now, you might consider a Charitable Remainder Trust (CRT).
A CRT is used to hold assets that produce an income stream for the donor (or other selected beneficiaries) for the donor's life or for a period of years. At the termination of the trust, the remaining trust assets (the "charitable remainder") are transferred to Bideawee.
Three immediate reasons to consider a CRT:
- Converts low-income-producing assets to a steady income stream.
- Minimizes or avoids capital gains taxes on the given assets.
- Generates an income tax deduction in the year of the gift.
Three strategic, long-term reasons to create a CRT:
- Makes the gift to a favored charity now, while the donor is still alive.
- Permits a more diversified portfolio investment strategy.
- Removes assets from the estate now, potentially avoiding estate tax.
Three characteristics of a typical CRT donor:
- Comfortable in making an irrevocable gift of $100,000, the minimum amount recommended for a CRT to perform efficiently.
- Able to handle, or to delegate, annual reporting and other tax issues.
- Willing to accept annual administration costs.
Why are CRT's so widely used?
CRT's are extremely flexible instruments, offering many options that can be tailored to meet a donor's specific needs. For example, A donor may:
- set up a charitable remainder annuity trust (CRAT) with a fixed annual payout
- set up a charitable remainder unitrust (CRUT) with a payout that varies based on the value of the investments
- within certain prescribed limits, select the payout rate
- select a lifetime payout or a term of years
- select the income beneficiaries and the charitable remaindermen
- opt to name a third-party trustee to administer the CRT or may serve in this capacity himself/herself.
What is a "flip trust"?
A "flip trust" is a charitable remainder trust set up to pay out a minimal income stream to the income beneficiary for a period of years, while the trust is invested for growth, and then "flipped" at a future "trigger date" to pay the income beneficiary at a higher established rate.
Important note:
When setting up a CRT, please consult an experienced attorney, in consultation with your accounting and financial advisors.
