Charitable Remainder Trusts

A charitable reminder trusts is a great way to support Boys & Girls Aid, receive an income for yourself or your heirs, and it offers considerable tax advantages for highly appreciated assets.

Benefits of a charitable remainder trust include:

  • A partial charitable income tax deduction
  • Potential for increased income
  • Up-front capital gains tax avoidance

There are two ways to receive payments with charitable remainder trusts:

  1. The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments. You are not able to add more money to the annuity trust.
    The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. You are able to add money to the unitrust. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.

How It Works

Bonnie, 74, wants to make a gift to Boys & Girls Aid but would also like more income in the future. Bonnie creates a charitable remainder unitrust with annual lifetime payments to her equal to 6 percent of the fair market value of the trust assets as revalued annually. She funds the trust with assets valued at $500,000.

Bonnie receives $30,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. She is eligible for a federal income tax charitable deduction of $275,725* in the year she creates and funds the trust. This deduction saves Bonnie $90,989 in her 33 percent tax bracket.

*Based on annual payments and a 2.4 percent charitable midterm federal rate. Deductions vary based on income earned.

You can use the following assets to fund a charitable remainder annuity trust or unitrust:

  • Cash
  • Appreciated Securities
    • Securities and mutual funds that have increased in value and been held for more than one year are one of the most popular assets to use when making a planned gift. Making a gift of securities or mutual funds offers you the chance to support a charity while realizing important benefits for yourself.
    • When you donate appreciated securities or mutual funds you have held more than one year, you can reduce or even eliminate federal capital gains taxes on the transfer. You are also entitled to a federal income tax charitable deduction based on the fair market value of the securities at the time of the transfer.
  • Tangible Personal Property
    • `Your treasures like valuable antiques, stamp and coin collections, works of art, cars, boats, and other personal property can make suitable charitable gifts today or after your lifetime. The financial benefits of the gift depend on whether the charity can use the property in a way that is related to the mission.
    • If the federal income tax charitable deduction claimed for a gift of tangible personal property exceeds $5,000, you must obtain an appraisal from a qualified appraiser and submit a special IRS form with the tax return on which the deduction is claimed.

Next Steps

  1. Contact Suzan Huntington at 503.542.2304 or Shuntington@Boys & Girls Aid.org for additional information on beneficiary designations and how they can help support Boys & Girls Aid.
  2. Talk to your financial or legal adviser to learn which assets will or will not trigger taxable income when paid to a beneficiary.
  3. If you name Boys & Girls Aid in your plans, please use our legal name and federal tax ID.

Legal Name: Boys & Girls Aid
Address: 018 SW Boundary Court, Portland, OR 97219
Federal Tax ID Number: 93-0386791

 

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