Charitable Remainder Trusts

Charitable Remainder Trusts

A Charitable Remainder Trust is a giving vehicle that helps you to provide for the future of Amnesty International and an income stream to you. If you have highly appreciated assets of significant value, you can transfer the assets to a CRT. A portion of the value of the trust will be paid back to you, and after your life, some or all of the remaining assets in the trust will be distributed to AIUSA.

A charitable remainder trust offers gift and estate tax relief by removing the taxable assets from your estate. You will have the satisfaction of knowing that you are benefiting the future of human rights while avoiding unnecessary tax consequences.

Benefits

  • You and/or your designated beneficiaries can receive income for life, or for any term of years you specify (up to 20).
  • Any assets you contribute to a Charitable Remainder Trust are removed from your estate, reducing your estate tax liability.
  • You receive a charitable income tax deduction in the year you make your gift, with an additional five years to carry over any unused deduction.
  • You greatly reduce capital gains liability on any appreciated assets that you contribute to a Charitable Remainder Trust.
  • With some CRTs, additional assets can be added to the trust.
  • Through reinvestment within the trust, you can achieve diversification of a previously concentrated asset.
  • You can utilize your chosen trustee's professional investment management expertise for your trust.

Next Steps

Setting up a Charitable Remainder Trust is not particularly difficult, but donors should be advised by an attorney with expertise in the area of charitable trusts and estate planning. Charitable Remainder Trusts require a trust agreement that outlines the terms and conditions of the trust. Once your trust agreement is signed, you can "fund" the trust by transferring assets to your appointed trustee.

What are the basic types of Charitable Remainder Trusts?

Unitrust (CRUT)

Pays a variable income (typically between 5-9% per year) based on a fixed percentage of the trust assets as revalued once each year. One advantage of a unitrust is that your income can increase as the trust principal grows over time. Also, you may make additional contributions at any time.

Annuity Trusts (CRAT)

Pays a fixed annual income determined at the outset. The annuity trust is often preferred by those who are interested in the security of a constant return. Additions cannot be made to annuity trusts.

FLIP Unitrust (FLIP)

The FLIP Unitrust allows you to defer or limit income payments until a future time, such as your 65th birthday or the sale of an illiquid asset, when the trust "flips" and begins to pay a percentage of the assets re-valued annually. Meanwhile, the trust assets can accumulate tax-free.