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Charitable Trusts


A trust is a legal entity that holds and invests assets on behalf of the trust's beneficiaries. There are several forms of charitable trusts that offer tax and financial planning benefits.


Should you decide to establish a charitable gift annuity, you will become a member of the Heritage Society.


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Charitable Remainder Unitrust

 

A Charitable Remainder Unitrust (CRUT) is a trust in which beneficiaries receive a fixed percentage (minimum 5%, maximum 50%) of the value of the trust assets as revalued every year. Typically, CRUTs are funded with appreciated property and/or cash. Additional contributions are possible.

Benefits:

  • no capital gains recognized upon transfer of appreciated assets to the trust, or upon sale by trustee (Part of beneficiary’s income may be taxed at low capital gains tax rates under the four-tier tax reporting system.)
  • receive a charitable income tax deduction equal to present value of the charity’s remainder interest
  • have greater flexibility to arrange lifetime income with a hedge against inflation
  • can structure CRUT to shift income to retirement years and achieve other purposes, including college funds for grandchildren


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Charitable Remainder Annuity Trust


The annuity trust shares many common features with the unitrust, the principal difference being the manner used to calculate the payment to the income beneficiary. Whereas the unitrust provides for a payout that varies with each annual valuation, the annuity trust provides for fixed payments based upon the fair market value on the date the trust is established.  Another difference is that additional contributions cannot be made to an annuity trust.

Benefits:

  • no capital gains recognized upon transfer of appreciated assets to the trust, or upon sale by trustee (Part of beneficiary’s income may be taxed at low capital gains tax rates under the four-tier tax reporting system.)
  • receive a charitable income tax deduction equal to the present value of the charity’s remainder interest
  • enjoy security of a fixed income


Click here to enter your personal information and receive an estimated calculation of income.


Charitable Lead Trust

 

The primary feature of a charitable lead trust is that it provides for the immediate support of the College through income generated by the assets in trust for a set period of time, after which the assets pass to a non-charitable beneficiary such as the donor, the donor’s children, or other persons the donor specifies. Thus, a charitable lead trust is conceptually the opposite of a charitable remainder trust. In a lead trust, the donor gives the College the current economic benefit of the transferred assets and retains the right to reacquire possession and control of the assets at a future date.

The donor during his or her lifetime creates an irrevocable trust agreement for a period of years. The agreement may take effect during the donor’s lifetime or be part of the donor’s will. Assets are transferred to a trustee, with the stipulation that the income from the assets be paid to the College for the life of the trust, after which the principal or corpus of the trust reverts back to the donor or others of his or her choosing.

Benefits:

  • meet charitable obligations
  • make discounted, deferred transfer of assets to children or grandchildren

Click here to enter your personal information and receive an estimated calculation of income.


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