Charitable Remainder Trusts
Charitable remainder trusts enable you to get the satisfaction of making a lifetime gift without the sacrifice. Here’s how they work:
You transfer assets to a trust that pays you (and another, such as a spouse, child or friend, if you wish) income for life or for a specified number of years. Then, the assets pass to the American Museum of Natural History.
One kind of charitable remainder trust, the charitable remainder annuity trust (CRAT), provides fixed payments that do not change during the payment period. Another kind of trust, the charitable remainder unitrust (CRUT) provides payments that adjust every year as the value of the trust assets increase or decrease. Subject to certain limits, you choose the amount or percentage the trust pays out each year.
Regardless of which type of trust you use, you save taxes now because you get an income tax charitable deduction in the year you fund the trust. The deduction depends on the type of trust, your age (and that of any other beneficiaries), the percentage to be paid, the amount placed in the trust and on the applicable federal rate published by the IRS each month. The older the income beneficiary, the larger the charitable deduction. The higher the percentage payment, the smaller the charitable deduction.
In addition, there is no capital gains tax liability at the time you fund a charitable remainder trust with appreciated assets. Depending on investments, part of your payment could be favorably taxed as capital gains (which can be offset by any capital losses you may have from other investments). It is also possible that part of your payment could be tax-free.
For more information on charitable remainder trusts, please contact the Planned Giving Office at (212) 769-5119 or firstname.lastname@example.org. There is no cost or obligation to you.