Charitable Remainder Trusts
A Charitable Remainder Trust provides the most flexibility and potentially the greatest tax savings of all The Community Foundation’s planned giving options. When you create a Charitable Remainder Trust, you receive income for life and/or can designate income to another person(s) for a period of up to 20 years.
What Is a Charitable Remainder Trust?
A Charitable Remainder Trust is a lump-sum gift to The Community Foundation, from which donors or their designated beneficiaries receive annual payments. These payments may be either fixed or based on a specified percentage of the trust’s changing value, as specified by the donor. Once the beneficiary(ies) are deceased, the remainder of the trust is added to an endowed fund at The Community Foundation, created or selected by the fundholder.
There are two kinds of Charitable Remainder Trusts, defined by the payment option you select:
What Are the Advantages?
- An annuity trust pays a fixed dollar amount each year, equal to at least 5% of the value of the assets placed in trust. ($500,000 placed in trust will generate $25,000 in annual income, regardless of market conditions.)
- A unitrust pays a set percentage (at least 5%) of the value of the trust’s assets as recalculated each year. (Payment amounts will increase or decrease with the annual market value of the trust’s assets.
- Charitable Remainder Trusts allow you to make larger gifts than might otherwise be possible, and often increase your spendable income in the process.
- You may designate multiple beneficiaries for your trust’s annual payments. You and your spouse may receive payments for life. Other beneficiaries may receive payments over a specified span of up to 20 years.
- You determine what kind of payments come from the trust: either a fixed amount or a variable payment, depending on your income needs and tolerance for market volatility.
- Receive an immediate tax deduction for your gift, determined by the age of your beneficiary(ies), the value of the assets placed in trust and the size of the payout you select.
- Enjoy significant capital gains tax reductions when you fund your trust with appreciated property.
- Trusts can often increase current income of low-yield assets.
What Can I Give?
You may create a Charitable Remainder Trust with cash, securities, real estate or other marketable assets.
A Charitable Remainder Trust is a Good Choice if:
- You wish to provide for a family member or friend after your death and receive substantial tax savings now and in your estate.
- You wish to assist a beneficiary for a specific purpose, such as creating a college fund for a child or grandchild.
- You wish to transfer investment and money-management responsibilities to a trustee.
How do I Create a Charitable Remainder Trust?
Charitable Remainder Trusts offer a wide range of options for donors, and The Community Foundation offers all the tools and expertise you need to create a trust that works best for you. We will work with you and your attorney or financial advisor to create your trust and handle all the details. Contact
our Development Staff for assistance.