Charitable remainder trusts are powerful, tax-wise gifts that enable you to further Kingdom causes while securing lifetime payments for you and your loved ones.
Benefits of a Charitable Remainder Trust
- Life income. Make a gift that also provides you and your loved ones with ongoing payments.
- Tax deduction. Receive an immediate income tax deduction for a portion of your gift.
- Preserved value. Gift appreciated assets instead of selling them and avoid the immediate tax bill. The full value of your gift will be invested for the benefit of your family and God’s Kingdom!
- Payment options. Select the annual payout rate and frequency of payments.
How it Works
- Make a gift into a charitable trust. Contributions may include cash, publicly traded securities, some types of closely held stock, real estate and certain other complex assets.
- Receive ongoing payments for one or more individuals, including yourself.
- Remaining assets are distributed to your favorite charities upon termination of the trust.
Lifetime Income Options
You will select your annual payout rate at the time the trust is created. The minimum percentage must be at least 5%, and the maximum allowable percentage depends on your age or the term of the trust.
Choose from two payout options…
- With a charitable remainder unitrust (CRUT) you’ll receive variable payments based on a fixed percentage of the value of the assets in the trust, as computed on January 1 of each year.
- A charitable remainder annuity trust (CRAT) provides fixed payments year-after-year, based on a specified percentage of the value of the assets originally placed in the trust. The amount does not vary, even if the value of the assets in the trust increases or decreases.
Charitable Remainder Trust vs. Sale of Appreciated Asset
Sam, 70 years old, owns a parcel of land that he originally purchased for $50,000 (tax cost basis). It is now worth $250,000.
Proceeds from Sale of Asset
|Capital Gain Tax*||-$30,000|
|Annual Payments in Year One||$11,000|
* Assumes 15% capital gain tax rate
Charitable Remainder Unitrust
|Charitable Deduction **||$131,195|
|Capital Gain Tax||$0|
|Net Proceeds in CRT||$250,000|
|Annual Payments in Year One||$12,500|
** Assumes AFR 3.0%
In addition to the increased income, Sam receives tax savings in the year of the gift from the charitable deduction. If the deduction cannot all be used in year one, it can be used as a deduction for up to five additional tax years.
Using Barnabas Foundation as a Trustee
Charitable remainder trusts require strict adherence to accounting, investment and reporting requirements. This places them beyond the administrative ability for most individuals or charities.
Since 1976, Barnabas Foundation has helped thousands of individuals and families give more effectively to the ministries close to their hearts. We have the experience and expertise to act as trustee for your more complex gift situations, including charitable remainder trusts.
Barnabas Foundation will help you identify the best giving options for your situation, in a way that’s clear and easy to understand. And we’ll help you do the most good – for your family and for God’s Kingdom – through efficient, tax-wise giving.
Explore how charitable gift annuities can help you support your favorite ministries while securing income for life.
Contact us today by calling 888.448.3040 or email us using our online contact form.
This information is not intended as tax, legal or financial advice. Gift results may vary. Consult your financial advisor and legal counsel for information and advice specific to your situation.