What is a Charitable Remainder Trust?
Charitable Remainder Trust permits a donor to defer the income tax consequences on the sale of a capital gain property and make a charitable gift. The donor transfers property to the trust, retaining the right to receive a stream of annual payments for a term chosen by the donor. At the donor’s death the remaining assets go to the charity. Two common types are Charitable Remainder Annuity Trusts and Charitable Remainder Unitrusts.
A Charitable Remainder Trust is a descriptive title for a trust that makes payments to you or your family and when the trust terminates, whatever is left in the trust (the remainder) is distributed as gifts to ministry. There are several types of trusts, but your stewardship goals and assets would determine the best type. A trust may be funded with cash, publicly traded securities, and/or real estate. Two commonly used Charitable Remainder Trusts are the straight-pay, or Unitrust, and Annuity Trust. • A Unitrust pays you a percentage of your choosing of the trust value each year. The percent generally is between 5 and 6.5 percent. The Foundation reinvests the assets to produce the payments for you and your family. • An Annuity Trust differs from the Unitrust in that the income is a fixed percentage of the value of the assets at the time it is transferred and remains the same for the term of the trust Establishing a Charitable Remainder Trust can be complicated and should start with con
It is a giving arrangement that resembles the pooled income fund and the annuities. The minimum gift is usually $100,000. Donors design the terms of the trust, who gets payments, are they fixed annuity payments or payments that vary with the investment earnings of the trust assets? Donors must obtain qualified legal counsel to review the terms of a trust document. If the UUA is named as one of the charitable beneficiaries of a trust, we offer to draft the initial document and work with donors and advisors to set it up. Many financial service business offer trust services, too. More information on Charitable Remainder Trusts Last updated on Wednesday, March 28, 2007.
