Charitable Trusts

There are as many different reasons for making a charitable gift, as there are contributors. Some give because of ideological commitment, some because of a desire to support the arts or sciences. Still others give out of compassion for the suffering of others.

Whatever the stated reason may be, the underlying reason most people give to charitable organizations is that they want to make a difference.
There are several tax benefits associated with charitable contributions as well. In fact, the tax laws specifically encourage charitable giving. A charitable gift in trust will enable you to realign your investments and provide you and your family with increased cash flow.

Also, making a charitable gift reduces your taxable estate, thus reducing the tax liability on your estate after you die.

Charitable Remainder Trusts (CRT)

 An arrangement where money or property is donated to a charity, but the donor has use of the property and/or receives income from the property for the donor’s lifetime or for a specified period of time.

·     Charitable Remainder Annuity Trust – The income distributed to the donor is a fixed dollar amount each year determined at the time the trust is funded.

·     Charitable Remainder Unitrust – The income distributed to the donor is determined each year as a fixed percentage of the market value of the assets at the end of the previous year.

The benefits a of CRT include:

· The donor receives an immediate income tax deduction for the present value of the remainder   interest of the trust that will go to charity. Assets transferred to a CRT are not included in the donor’s estate The donor may retain some control of the way the assets are invested by the corporate trustee.

· The transfer of appreciated assets from a donor to a charitable trust does not incur capital gains tax.

Charitable Lead Trusts

An irrevocable split-interest trust that makes annual distributions to a charity for a term of years or for the lifetime of one or more individuals, after which the trust interests are distributed either back to the donor or to other non-charitable beneficiaries, usually family.  If the assets are distributed to individuals other than the donor, the transfer tax consequences are fixed when the trust is established based upon the present value of the future transfer.

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Donor Advised Charitable Fund

A charitable giving vehicle  administered by a third party created for the purpose of making a gift to charity where the donor does not want to pick the charities that will receive the funds right now, but instead wants to distribute the funds over time, and the donor does not want to create a private foundation.  The account is established within a public charity, often a community foundation.  The donor gives complete control over the donated funds to the charity so the donor gets a current income tax deduction for the full amount of the    contributed assets.  Despite the fact that the donor relinquishes control over the donated funds, the unique  aspect of a Donor Advised Fund is that the donor can  remain involved by making non-binding recommendations to the public charity as to    investment policy and distributions.

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