Trusts have been used for centuries to manage property designated for charitable use. Today, the CRT is being used as a way for people to make a significant gift in support of their charitable interests while first accomplishing other important financial goals.
How does a CRT work? With the help of appropriate advisors, you can transfer property (cash or other assets) to an irrevocable trust and designate a charity to receive the assets when the trust ends. You may specify that payments from the trust be made to you and/or one or more others for life. As an alternative you can choose to provide an income for a period up to 20 years, or certain combinations of lives and terms of years.
You can choose a level of fixed income at the time the trust is created or the trust can be set up in such a way that income can fluctuate over time with the performance of the assets in the trust. The minimum payout under either arrangement is 5%. At the end of the trust period, the remaining property (the charitable remainder) becomes the property of the charity you designate.
Since the property transferred to the trust will be used for charitable purposes in the future, gift, estate and income tax deductions equal to the value of the gift portion of the trust are allowed in the year of the gift. Furthermore, if you transfer appreciated assets, such as appreciated securities, to the trust you avoid having to pay capital gains tax on these transfers. Also if these securities were paying little or no income, you may now enjoy an income stream that was not otherwise available.
In short, through a CRT you may be able to enhance your income, receive tax benefits and enjoy the knowledge that the funds remaining when the trust ends will be devoted to the charitable use you choose. Our church would benefit by your designating the church to be the recipient of the trust assets. Along with your financial advisor, the United Church of Christ has resources that can assist you in setting up and managing a CRT, and the various other kinds of planned giving possibilities. We would be happy to discuss with you CRTs or any other planned giving topics.
Planned Giving Committee
Betty Keirstead, Leigh King, Bob Lyle, Tim Patterson