Charitable Remainder Trusts
Charitable remainder trusts offer a tremendous amount of planning power for those alumni and friends of Quinnipiac who want to do well by doing good. In its simplest form, assets are placed in the hands of a trustee who manages the trust in keeping with the guidelines you establish. At the end of the trust’s term, the trust ends and the assets come to support the Quinnipiac program of your choice.
The planning power inherent in the charitable remainder trust stems from its flexibility and the number of options available that can be mixed and matched to meet your personal goals. The term of the trust may be for one life or multiple lives and, in some cases, generations. The term may also be for a specified term of years or for a life or lives and a term of years.
The charitable remainder trust may accept many more different types of assets than other planned giving vehicles. In addition to cash and securities, charitable remainder trusts may also be funded with real estate, closely held stock and many others.
Because the trust is tax exempt, capital gains taxes are not due upon the sale of highly appreciated property; hence, the entire corpus is invested for you and for Quinnipiac’s benefit. You receive an income tax deduction the year you establish the trust, and your estate qualifies for an estate tax deduction.
Another strength of the charitable remainder trust is that there are a variety of forms that the trust may take. The two primary forms are the charitable remainder annuity trust and the charitable remainder unitrust. What makes the two different is the way in which the payout to the income beneficiaries is determined.
The charitable remainder annuity trust makes payments based on a fixed percentage (at least 5%) of the value of the assets originally placed in trust. Effectively an annuity arrangement, the charitable remainder annuity trust works well for a donor who prefers a fixed income but wants to name more than just two income beneficiaries or who wants the payments to last for something other than one or two lives (ie: a term of years). Because of the nature of this charitable trust, additional contributions are not allowed.
The charitable remainder unitrust makes payments based on a fixed percentage of the value of the assets in the trust, as they are revalued each year. This percentage, known as the unitrust amount, must be at least 5%. In this way, the income beneficiaries will see their income fluctuate year to year based on the investment performance of the trust. Variations of the charitable remainder unitrust include trusts that are required to pay the lesser of all net income earned by the trust and the unitrust amount and the “Flip Trust” which is particularly effective dealing with gifts of real estate or other non-income producing assets.
For more information, please contact Steven Greaves, director of gift planning, at 203-582-3995, toll-free at 877-582-1929 or by e-mail at firstname.lastname@example.org.
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