Charitable Trusts

What is a Charitable Remainder Trust?

A Charitable Remainder Trust is an irrevocable trust that allows you to give to charity a future interest in property you now own. You may receive the income your gift generates during your lifetime, or for a certain designated period. If you prefer, you can designate a beneficiary to receive the income for a set period of time after your death. For example, your spouse may receive the trust income for the remainder of her/his life. After your death, the death of your beneficiary or the designated time period the charity begins to receive the income.


Who Should Consider A Charitable Remainder Trust?

Individuals and their spouses who need a source of income to live during their retirement years, but who want to support a charity after their death should consider Charitable Remainder Trusts.

If estate taxes would seriously erode the amount of your estate left to your children or grandchildren, a Charitable Remainder Trust is one way of reducing that tax liability. A Charitable Remainder Trust may reduce the taxable amount of your estate while providing you with a lifetime income. After your death, you will be helping a favorite charity, or charities, when your trust dissolves and contributes the proceeds. Such a move is especially smart if your children do not need a substantial bequest from you to enhance their lifestyle.

Perhaps you had planned to leave a portion of your estate to charity. A Charitable Remainder Trust allows you to make that bequest now, receive income tax benefits while you`re alive and still enjoy the income today.

The trust can he structured for growth during the early years while you are working, and for income in later years when you need the trust earnings.

Owners of highly appreciated property, such as stocks and real estate, can benefit from contributing these assets to charity through a Charitable Remainder Trust.


What Are The Benefits of a Charitable Remainder Trust?

You may receive an income tax deduction for your charitable contribution in the year you establish the trust. You can then receive lifetime income from the trust. After your death or the death of your beneficiary, the taxable amount of your estate is reduced and its assets turned over to your designated charity or charities.

Although the trust is irrevocable, you as the grantor create the trust, set the terms of the trust, determine the charities to benefit from the trust, and may even serve as trustee.
 

How Can A Charitable Remainder Trust Save Taxes?

A Charitable Remainder Trust saves taxes in a number of ways. As the grantor of the trust, you may receive a charitable income tax deduction, based on the value of the contribution, in the year that you set up the trust.

A Charitable Remainder Trust can he named as beneficiary of your IRA or qualified retirement plan upon your death, and you will avoid income and estate taxes on those funds. You may want to look at contributing qualified assets during your lifetime.

Finally, the amount of potential tax due on your estate may be reduced if some of your assets are in a Charitable Remainder Trust.


How Can I Setup A Charitable Remainder Trust?

Independent Compensation Consultants, Inc., a member of the Independent Group of Companies,SM can coordinate the process with you.

A Charitable Remainder Trust is a complex legal document. It should be prepared by a lawyer who is experienced in trusts and estate law. Similarly, the tax aspect should be supervised by a Certified Public Accountant or other experienced tax advisor who is familiar with Charitable Remainder Trusts.

John Forken and the professionals at Independent Compensation Consultants, Inc. are able to work with your attorney and accountant to weigh the merits of such a trust to see if one can benefit your current situation, as well as your estate. We can then work with them on the details of creating the trust, provide the management and act as a service provider for the fiduciary.



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