Charitable Remainder Trust
If you have built up a sizable estate and are also looking for ways to receive reliable payments, and support GW, you may want to check out the advantages of setting up a charitable remainder trust.
Benefits of a charitable remainder trust include:
- Income for life; support for your spouse or other beneficiaries
- Potential for a partial charitable income tax deduction
- Potential for increased income
- Up-front capital gains tax avoidance
These types of gifts may offer you tax benefits and the option for income. There are two ways to receive payments and each has its own benefits:
The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.
The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
How It Works
Donor
1. Give assets
Charitable remainder unitrust
2. Income tax deduction
No or reduced tax on capital gain
Variable payments
3. Remainder to GW
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You transfer cash, securities, or other property to a charitable remainder trust.
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You receive an income tax deduction. If you give appreciated assets, you pay no capital gains tax on their transfer to the trust. During its term, the trust pays a percentage of its value each year to you or to anyone you name.
- When the trust ends, its remaining principal passes to GW.
Discover More
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.
Achieve Personal and Philanthropic Financial Stability
Susan, 75, wants to make a gift to GW but would also like more income in the future. Susan creates a charitable remainder unitrust with annual lifetime payments equal to 5% of the fair market value of the trust assets as revalued annually. These payments are designated toward supporting herself. She funds the trust with assets valued at $500,000.
Susan receives $25,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. She is eligible for a federal income tax charitable deduction of $290,360* in the year she creates and funds the trust. This deduction saves Susan $92,915 in her 32% tax bracket.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
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