Charitable Remainder Annuity Trust (CRAT)

  • The donor hires an attorney to construct and write the legal documents necessary to create a Charitable Remainder Annuity Trust (CRAT). Assets are irrevocably placed in the trust naming a charity as the eventual recipient of the asset values upon the death of the last-named lifetime income beneficiary.
  • A fixed (Charitable Remainder Annuity Trust-CRAT) amount of income (5% to 10%) is paid from the trust annually to the donor or donor's named income beneficiary (husband, wife) for life. A Charitable Remainder UniTrust-CRUT pays an annual fixed percent of the underlying assets.
  • The donor of the assets placed in the trust receives a current tax deduction for the donation and they avoid any and all capital gains on the donated assets. The amount of tax deduction associated with the donation depends on the age of the last income recipient and the donor's elected income or percent lifetime payout from trust.
  • Donor can lock in current market appreciation on assets; convert a low yielding stock position to a high yielding bond position; broadly diversify a portfolio; and structure to parallel donated asset's future appreciation. Control of the assets remains with the donor's appointed trustee, which can be the donor.
  • Potentially significantly higher lifetime income to the donor, and or other named lifetime income beneficiaries.
  • Potential to replace the gifted value to other intended heirs on a tax- free basis, with one of several cost-effective life insurance related strategies.
  • Partial or full elimination of the asset gifted from federal estate tax calculations upon the death of the donor.
  • Significantly benefit your favorite charity(s) sometime in the future.
  • Generally, this concept works for everyone with appreciated assets; however, each situation is different and unique and there are a number of variables which enter in the calculations based on age, tax bracket, income payout percentages.
  • If the donor's lifetime payout is a fixed dollar amount then the donor is permitted only a one-time asset donation to the trust (CRAT). A CRUT allows additional contributions to trust.

Charitable Remainder Unit

  • The donor hires an attorney to construct and write the legal documents necessary to create a Charitable Remainder Unit Trust (CRUT).
  • Assets are irrevocably placed in the trust naming a charity as the eventual recipient of the asset values upon the death of the last-named lifetime income beneficiary.
  • A variable (Charitable Remainder UniTrust-CRUT) amount of income is paid from the trust to the donor or donor's name income beneficiary for life.
  • The donor of the assets placed in the trust receives a current tax deduction for the donation and they avoid any and all capital gains, if any, on the donated assets.
  • The amount of tax deduction associated with the donation depends on the age of the last income recipient and the donor's elected income or percent lifetime payout from trust.
  • Control of the assets remains with the donor's appointed trustee, which can be the donor.
  • Potentially significantly higher lifetime income to the donor, and or other named lifetime income beneficiaries.
  • Potential to replace the gifted value to other intended heirs on a tax- free basis, with one of several cost-effective insurance related strategies.
  • Partial or full elimination of the asset gifted from Federal Estate Tax calculations upon the death of the donor.
  • Significantly benefit your favorite charity(s) sometime in the future.
  • Generally, this concept works for everyone with appreciated assets; however, each situation is different and unique and there are a number of variables which enter in the calculations based on age, tax bracket, income payout percentages.
  • If the donor's lifetime payout is a percent based on the value of the trust's assets then unlimited asset donations to the trust is permitted.

Charitable Remainder UniTrust (CRUT) with Make-up Provisions

  • The donor hires an attorney to construct and write the legal documents necessary to create a Charitable Remainder UniTrust, with a catchup provision.
  • Assets are irrevocably placed in the trust naming a charity as the eventual recipient of the asset values upon the death of the last-named lifetime income beneficiary.
  • A variable amount of income, based on a percent of trust assets, is designated as the annual payout to the income beneficiaries.
  • Income is earned tax deferred within the trust, but not paid from the trust to the donor or donor's name income beneficiary until some future date. At which time, all income not paid in the past is “caught-up” and paid.
  • The donor of the assets placed in the trust receives a current tax deduction for the donation and they avoid any and all capital gains on the donated assets.
  • The amount of tax deduction associated with the donation depends on the age of the last income recipient and the donor's elected percent lifetime payout from trust.
  • Control of the assets remains with the donor's appointed trustee, which can be the donor.
  • Potentially significantly higher lifetime income to the donor, and other named lifetime.