Charitable Remainder Trusts
A Charitable Remainder Trust, or CRT, is a flexible plan that provides you and your family with an income stream for life and an immediate charitable income tax deduction. An Annuity Trust (CRAT) makes a fixed payment of 5% or more. A Unitrust Trust (CRUT) makes payments based on market value so it varies, but it is never less than 5% of the portfolio’s value. If you fund the trust with appreciated securities, you will avoid capital gains taxes.
The benefits to you include:
- An immediate tax deduction based on your age(s) and rate of return
- The assets are removed from your estate
- Income streams for life
- No capital gains tax if funded with appreciated securities
Charitable Remainder Trust Example*
Mr. Jones, Class of 1951, age 80 and Mrs. Jones, also 80 decide to contribute $100,000 to the Case Alumni Foundation to establish a Charitable Remainder Annuity Trust that will eventually become a scholarship endowment fund to support furture generations of students at the Case School of Engineering. They donate appreciated securities that they purchased for $50,000 and currently receive $2000 per year in dividends. With the established trust they will receive an annual income of $6830 (6.83%) an increase of $4830 over their current income and an immediate tax deduction of $37,330. Mr & Mrs Jones do not incur a capital gains tax on their gift.
After both lives the trust assets will pass to the Case Alumni Foundation to establish the endowed scholarship fund.
*For illustration purposes only