By: Laurie Valentine
Charitable gift planning not only provides a variety of ways for you to provide valuable support to causes that are important to you, it can also help you solve certain personal financial challenges.
One such giving plan is a charitable remainder unitrust (“CRUT”). A CRUT is an irrevocable trust that pays a designated income stream to the giver and/or others for life or a term of years and the remainder to one or more charitable organizations.
A CRUT can provide beneficial ways to solve a variety of financial challenges such as:
Providing Funds for College: Your grandson is starting college this fall and you would like to help with his expenses. A gift of $100,000 to a CRUT that will pay him 15% of the value of the trust assets for 5 years will provide the following benefits: a $45,000 charitable income tax deduction for you; payments averaging $12,400 each year to your grandson; and, at the end of the 5-year trust term, approximately $61,000 (assuming a 6.2% average annual return) left to distribute to the charities you named in the trust agreement.
Financial Assistance for Family Members: You have been providing $500 per month ($6,000 per year) to your 85-year-old father for the past few years. While, at age 65, you have no current health problems, you want to make sure that support would continue for your father, no matter what your future circumstances. A gift of $100,000 to a CRUT paying your father for his lifetime and then you, if you survive him, 6% of the value of the trust assets, as revalued annually, establishes a plan that will provide a gradually growing stream of income to your father, and then you. It also entitles you to an income tax deduction of approximately $36,845 and provides you the opportunity to set up a gift that will provide significant future support to ministries that are important to you.
Laurie Valentine is COO and Trust Counsel for the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; (502) 489-3533 or 1-866-489-3533 (Toll-free, Kentucky Only); KYBaptistFoundation.org
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.