Charitable Remainder Trusts

Charitable Remainder Trusts are an excellent tool that accomplish many different tasks.

What are their major benefits?

  • No capital gains tax is paid on securities that are transferred directly into the trust.
  • A reliable monthly income is provided.
  • Donors receive an immediate tax deduction.
  • A terrific way to establish a foundation that will one day provide support to the community in perpetuity.

For example, Mrs Jones would like to avoid paying capital gains tax on a stock that was purchased 30 years ago for $50,000, and is now worth $500,000.  The stock could be used as the initial donation to set up a charitable remainder trust, that will pay an annual rate of 5% on a monthly basis.  What are the benefits to Mrs. Jones?

  • Avoided paying a minimum of $75,000 in capital gains taxes.
  • Got a tax deduction based on the value that was donated to the trust.
  • Will receive $25,000 in income over the next year, or $2083 per month.
  • When Mrs. Jones passes away, the remaining balance in the trust will be used to support her church, college, and the local food bank in her community forever.