Charitable Remainder Trust
A Charitable Remainder Trust (CRT) offers a way to make a meaningful future gift to Susan G. Komen Northwest NC, while at the same time providing you or others you name with income for a specified period of years or for life. Here’s how it works:
- You irrevocably transfer cash, securities real estate or other appreciated assets into the trust.
- You, and/or someone you designate such as your spouse, receive income for life, or a term up to 20 years. A Charitable Remainder Unitrust (CRUT) pays the income recipient(s) a percentage of the market value of the assets each year (which is re-valued annually), while a Charitable Remainder Annuity Trust (CRAT) pays the income recipient(s) a fixed annual income based on a percentage of the original market value of the trust.
- You receive an immediate charitable income tax deduction based on a portion of the market value of the assets transferred to the Trust; the amount you can deduct is the “present value” of the charitable remainder interest, which is calculated by considering the number of years the trust will be paying income and the amount of income it will be paying. We can show you more about how this works.
- At the end of the trust term, or upon the death of the income recipient, the remaining assets will be distributed to Susan G. Komen Northwest NC.
- If you fund the trust with appreciated assets (stock or property that have significantly increased in value since you purchased it), no capital gains tax is due on the property you transfer to the trust until it is paid out (either to the income recipient or the charity).
- You can name anyone you want to be the Trustee, including yourself, a family member, or a bank.
There are some limits to the benefits of a CRT. The payout to the income recipient cannot be so high that the present value of the remainder (discussed above) is less than 10% of the trust’s value. The income recipient does get taxed on payments received from a CRT (based on a complicated four-tier system which is usually some combination of income and capital gains), but the Trustee will provide you an annual statement of that amount for the income recipient’s tax return.
CRTs are trusts that will have to be set up by an attorney, but once they are in place, they can offer great benefits for you and for Susan G. Komen Northwest NC.