Planned Giving

Charitable Remainder Trust

If you have built a sizeable estate and also are looking for ways to receive reliable payments, consider a charitable remainder trust. A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

This type of gift 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 the value of 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.

An Example of How it Works

John, 75, wants to make a gift to TPWF but would also like more income in the future. John creates a charitable remainder unitrust with annual lifetime payments to his equal to 5% of the fair market value of the trust assets as revalued annually. He funds the trust with assets valued at $500,000.

John receives $25,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. He is eligible for a federal income tax charitable deduction of $290,360* in the year he creates and funds the trust. This deduction saves John $92,915 in his 32% tax bracket.