Charitagle Remainder Trust

Charitable Remainder Trust

A Charitable Remainder Trust offers tax savings and flexibility to accomplish two separate goals: making a gift to Young America’s Foundation while at the same time providing income for loved ones. You transfer property irrevocably to a trust. Then, you specify your payout rate (usually 5-8%), beneficiaries to receive income, and trust term (a period of 20 or fewer years or the life of a beneficiary or beneficiaries). Young America’s Foundation will receive the remainder of the trust’s assets at the end of the trust’s term.

You choose between two types of Charitable Remainder Trusts:

A Charitable Remainder Annuity Trust pays fixed income for the life of the trust based on the trust’s initial value. The distributed amount cannot exceed an amount that would likely exhaust the trust assets during the anticipated term of the trust. No additions may be made to this trust after it is established.
The Charitable Remainder Unitrust pays a fixed percentage (at least 5%) of the trust’s value, as re-valued annually. Payments vary because the trust’s value changes year to year. Additions may be made to this trust after it is established.

Your trust assets grow tax-free. That means if you select a 5% payout and your trust investments earn 8% in a given year, your trust would earn 3% in tax-free growth that year. This tax-free growth could substantially increase the value of your trust over time.

You are entitled to a charitable income tax deduction for the year you establish your Charitable Remainder Trust. Any amount not deducted in the year you establish your Trust may be carried forward and taken for up to five years.

The charitable deduction is calculated based on the annuity rate, the initial value of the assets transferred to the trust, the date of transfer, the age and the number of beneficiaries and/or the term of years, and IRS tables for calculating remainder values. A higher annuity rate produces a smaller deduction.

You can avoid capital gains taxes on highly appreciated properties if you use those assets to fund your Charitable Remainder Trust. Securities must be held for more than one year to qualify.

You can establish a Testamentary Charitable Remainder Trust in your will to avoid probate, estate taxes, and estate administration expenses that would otherwise be imposed on trust assets.

Please call Kimberly Begg at 800-USA-1776 to request a free illustration of your benefits.

Charitable Lead Trust

A Charitable Lead Trust offers tax savings and flexibility to provide current gifts to Young America’s Foundation and pass on remaining assets in the trust and any growth it has realized to loved ones or back to you.

You may be interested in a Charitable Lead Trust if you have little need for the current income an asset is generating, wish to keep your assets in your family, and intend to reduce your taxable estate and potential gift taxes.

There are no minimum payout requirements and no specific limitations on the trust’s term.

You choose between two types of Charitable Lead Trusts:

A Non-Grantor Lead Trust makes gifts to Young America’s Foundation for a period of time with the remainder then being passed on to your children, grandchildren, or other loved ones at greatly reduced federal gift and estate taxes. Unlike a Charitable Remainder Trust, a Non-Grantor Charitable Lead Trust does not entitle you to a charitable income tax deduction. Any income earned each year is taxable to the trust, which is then titled to offset the income by the distributions made to Young America’s Foundation. You save income taxes because the income diverted to Young America’s Foundation is removed from your taxable income.

A Grantor Lead Trust makes gifts to a tax-exempt organization for a period of time, with the principal then being passed back to you when the term of the trust ends. Like a Charitable Remainder Trust, a Grantor Charitable Lead Trust entitles you to a charitable income tax deduction for the year you establish the trust. However, you must report any taxable income the trust earns during the term of the trust, including the amount directed to Young America’s Foundation.

Both Non-Grantor and Grantor Lead Trusts are available in annuity trust (pays fixed income for the life of the trust based on the trust’s initial value) and unitrust (pays a fixed percentage of the trust’s value, as re-valued annually) versions.

You can establish a Testamentary Charitable Lead Trust in your will to provide an estate tax deduction based on the present value of Young America’s Foundation’s income interest. The term of your trust and payout percentage can be calculated in such a way as to reduce or eliminate estate taxes and take maximum advantage of your unified credit.

Young America’s Foundation can provide trust administration, asset management, and trustee services.