A Charitable Trust is a wonderful example of a gift that benefits both the Church and you or your family members. There are many different types of charitable trusts, which make them the most flexible charitable giving vehicles available at The Foundation. It is this flexibility that makes it so attractive to a wide variety of donors. The two main types of charitable trusts are the Charitable Remainder Trust and the Charitable Lead Trust.
A Charitable Remainder Trust (CRT) lets you donate cash, stock or other assets to The Foundation and provides regularly scheduled payments to you, a spouse or other individual for life or a specified term of years. As the remainder beneficiary, the charitable organization within the Diocese of Ogdensburg you designate receives all the remaining funds at the end of that period. You reduce estate and gift taxes, and retain a reliable stream of income. In addition, you receive an immediate tax deduction based on the present value of the charity’s future interest. Charitable Remainder Trusts are popular with people who own stock or other assets that have appreciated significantly.
Charitable Remainder Trusts have become popular estate planning tools. Here’s how they typically work:
- You give assets to The Foundation via a tax-exempt trust (the CRT)
- You, your spouse or other beneficiaries receive regularly scheduled payments for life or for a term of years
- Assets grow tax-exempt inside the trust and, when sold, incur not capital gains tax in the trust
- Payments are made annually to the named beneficiaries at the rate that was established on the day the trust was recognized
- The parish, school or other diocesan organization, institution or ministry you have designated receive the assets upon the death of the last remaining beneficiary
The Charitable Remainder Trust can be an effective tool to handle a variety of situations including education, retirement, spousal income, income to your heirs, and wealth accumulation. This is, of course, in addition to the wonderful gift left to the Church as part of your legacy of faith.
A Charitable Lead Trust (CLT) works just the opposite. This type of gift provides the charities you select with a fixed stream of income for a term of years or your lifetime or that of your designated beneficiary. At the end of that time, the balance is either transferred back to you or to your designated beneficiary. Some of the benefits of a CLT:
- A CLT allows you to make an ongoing gift to charity while retaining a future interest in the asset
- Current-year tax deduction for the present value of the amount to be received by the charity
- Assets can be passed on to heirs at a substantially discounted value
- Highly appreciated property can sometimes be transferred without recognition of the gain by you or your heirs
- You are taxed on the income during the term of the trust
A Charitable Lead Trust is an excellent tool to use when there is an immediate charitable need you desire to fill, you don’t need current income from the asset and want the property back in the future for yourself, your heirs or other purposes.
If you have minor children, grandchildren or other family members who will not need the income from assets right ways, a Charitable Lead Trust can be a great way to save taxes and make generous contributions at the same time.