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If you have assets that you wish to give to Save the Children, but you would like to keep the income now, you might consider a Charitable Remainder Trust (CRT).
How does a CRT work?
Typically, a CRT is used to hold assets that produce an income stream for the donor (or other selected beneficiaries) for the donor's life or for a period of years. At the termination of the trust, the remaining trust assets (the "charitable remainder") are transferred to Save the Children.
Three immediate reasons to consider a CRT:
1. Converts low-income-producing assets to a steady income stream.
2. Minimizes or avoids capital gains taxes on the given assets.
3. Generates an income tax deduction in the year of the gift.
Three strategic, long-term reasons to create a CRT:
1. Makes the gift to a favored charity now, while the donor is still alive.
2. Permits a more diversified portfolio investment strategy.
3. Removes assets from the estate now, potentially avoiding estate tax.
Three characteristics of a typical CRT donor:
1. Comfortable in making an irrevocable gift of $100,000, the minimum amount recommended for a CRT to perform efficiently.
2. Able to deal with, or to delegate, annual reporting and other tax issues.
3. Willing to accept annual administration costs.
Why are CRT's so widely used?
CRT's are extremely flexible instruments, offering many options that can be tailored to meet a donor's specific needs. For example, A donor may:
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set up a charitable remainder annuity trust (CRAT) with a fixed annual payout;
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set up a charitable remainder unitrust (CRUT) with a payout that varies based on the value of the investments;
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within certain prescribed limits, select the payout rate;
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select a lifetime payout or a term of years;
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select the income beneficiaries and the charitable remaindermen;
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opt to name a third-party trustee to administer the CRT or may serve in this capacity himself/herself.
What is a "flip trust"?
A "flip trust" is a charitable remainder trust set up to pay out a minimal income stream to the income beneficiary for a period of years, while the trust is invested for growth, and then "flipped" at a future "trigger date" to pay the income beneficiary at a higher established rate.
Important note:
CRT's should be set up by an experienced attorney, in consultation with your accounting and financial advisors. Save the Children can help in the conceptual stages.
