CHARITABLE REMAINDER TRUSTS
Ganon J . Studenberg , J . D ., LL . M ., AEP Studenberg Law
WITH THE RECENT significant increase in property values , many people are interested in selling real estate or other appreciated assets . But did you know you can avoid capital gains taxes , support your favorite non-profit and set up a lifetime income stream ?
A charitable remainder trust provides an opportunity to benefit non-profits while maintaining a lifetime of income for yourself . This type of estate planning vehicle can hold assets such as real estate , regardless of whether you intend to sell it . Trust income is paid to you or other designated beneficiaries on an annual basis . After your lifetime or a designated period of time , all remaining trust assets are gifted to the non-profit of your choice .
The option of a charitable remainder trust is especially attractive for real estate or other highly appreciated assets to avoid significant capital gains taxes upon sale . You receive an immediate charitable deduction based on the fair market value of the asset and if the highly appreciated property is sold , there is no capital gains taxes charged to you on the sale .
There are two types of charitable remainder trusts depending on your preference , a charitable remainder annuity trust or a charitable remainder unitrust . An annuity trust ( CRAT ) provides an annual fixed payment ( which can be split up in monthly installments ) based on the value of the trust assets at the time the trust was created and only a one-time gift into the trust is allowed . A unitrust ( CRUT ) provides an annual percentage payment ( which can also be split up into monthly installments ) based on the value of the trust assets each year and you can make additional gifts into the CRUT at any time .
As with all planning , please be sure to contact your estate planning attorney to discuss your best options to achieve your personal and charitable goals .
Ganon Studenberg is the past Board Chair of the EFSC Foundation .
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