Life Income Gifts

Charitable Remainder Trusts

Charitable remainder trusts are individual trusts that can be tailored to your financial goals and assets. They may be set up with gifts of cash, appreciated securities, real estate, closely held stock, collectibles, or cash.

Benefits of a charitable remainder trust include:

• Income is provided for you and/or a designated beneficiary
• Income may be paid for a set number of years (maximum 20 years) or for the beneficiaries' lifetime
• You decide the percentage of the trust to be paid as yearly income at the time the trust is set up, within IRS guidelines
• The trust itself is tax-exempt; therefore, appreciated assets donated to the trust can be sold without incurring capital gains tax, allowing the full sale proceeds to be reinvested
• No tax is paid on undistributed income or capital gain for the duration of the trust
• You will be entitled to an immediate income tax deduction for a portion of the value of your gift - the lower percentage payout you choose, the larger the deduction

There are two basic kinds of Charitable Remainder Trusts. The unitrust provides variable income, and the annuity trust provides fixed income.

The Charitable Remainder Annuity Trust pays a set dollar amount each year, which is equal to your chosen percentage of the original fair market value of the trust.

The Charitable Remainder Unitrust pays a variable amount each year equal to the chosen percentage of the changing value of the trust. The yearly income will change as the value of the unitrust changes. Charitable Remainder Unitrusts can be set up for gifts of real estate, closely held stock, collectibles or cash.

Examples:

Charitable Remainder Annuity Trust

If you were to establish an annuity trust at age 65, paying 5%, with $250,000 of appreciated property with a cost basis of $180,000, you would receive:

• $12,500 a year for life, or a term of years, whichever you choose
• An immediate income tax deduction of up to $106,000

Charitable Remainder Unitrust

If you were to establish a unitrust at age 65, paying 6%, with $250,000 of appreciated property with a cost basis of $180,000, you would receive:

• An immediate income tax deduction of up to $100,000
• Income for life, or a term of years, whichever you choose.
• The first year your income would be $15,000
• Each year after that your income would equal 6% of the revalued amount of the trust.

Every gift is unique. Your benefits will vary with the timing of your gift.

This information is for informational purposes only. Earthjustice is not in a position to offer financial or estate planning advice. We recommend reviewing any gift plan with your personal advisors.