Charitable Remainder Trusts create income for life for the donor

Bortech Corporation employee Judy Duquette

A gift that pays back: After creating a Charitable Remainder Trust, the donor, or the donor plus designated beneficiaries, receive quarterly payments. After the death of the final beneficiary, the assets in the Charitable Remainder Trust are distributed to the nonprofit organizations of the donor’s choice, including the Community Loan Fund.

Benefits: Charitable Remainder Trusts provide many advantages. These include:

  • Income for life. Beneficiaries receive quarterly income for life. This can be a fixed dollar amount, or it can vary, as a percentage of the changing market value of the Charitable Remainder Trust. If established with appreciated stock, a Charitable Remainder Trust produces income that is typically considerably higher than what the stock was paying in dividends.
  • No upfront capital gains tax. If you establish the Charitable Remainder Trust with appreciated stock, you pay no upfront capital gains tax. All of your gift goes to work for you.
  • Federal income tax deduction. A portion of your gift will be tax-deductible in the year of your donation. Check with us for an analysis of your situation.
  • The opportunity to leave a significant legacy. Your funds will create opportunity and transform the lives of people with low and moderate incomes across New Hampshire.

Quarterly payments: Income payments are made at the end of each quarter.

Multiple charitable beneficiaries: Charitable Remainder Trusts are typically set up through trust companies, law offices, or financial institutions. Unlike some other forms of life-income gifts, it’s possible to name several charitable organizations as beneficiaries – with a percentage of the trust’s assets designated for each.

Flexibility: Charitable Remainder Trusts can be customized to meet the needs of both the donor and charities in terms of rate, timing of payments, and investment strategies. It is also possible to establish a Charitable Remainder Trust with a gift of real estate.

Considerations: Charitable Remainder Trusts, unlike Charitable Gift Annuities (a very popular alternative) are fairly complex to establish, require some costs for creation of the trust documents, and some ongoing annual expenses. Because of this, most experts consider $250,000 the minimum size for establishing a Charitable Remainder Trust. (Do note that many of the same benefits can be attained through a Charitable Gift Annuity, which has a minimum size of only $10,000.)

Community impact: Your gift will build the Community Loan Fund’s lending pool for affordable housing, job creation, and child care in perpetuity.

Next steps: To discuss Charitable Remainder Trusts and your situation, and any other aspects of charitable gift planning, please contact Mat Solso.