Charitable Remainder Annuity Trust
How it Works
- You transfer cash, securities or other appreciated property into a trust.
- The trust makes fixed annual payments to you or to beneficiaries you name.
- When the trust terminates, the remainder passes to Exeter to be used as you have directed.
- Receive income for life or a term of years in return for your gift.
- Receive an immediate income tax deduction for a portion of your contribution.
- Pay no upfront capital gains tax on appreciated assets you donate.
- Your trust can meet personal or family needs that are tied to a specific timeframe, such as tuition payments.
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Questions and Answers
In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.
Typically such a trust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. An annuity trust may also hold tax-free bonds.
Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.
It depends on the age(s) of any children you name as income beneficiaries. Our interest in the trust must be at least 10% of the value of the assets donated to the trust. This interest is calculated using the life expectancies of the income beneficiaries. Thus, the younger your children, the longer their life expectancy, and the smaller will be the charitable remainder value. Even younger adult children may disqualify the trust.
A charitable remainder annuity trust is a powerful tool that can save you income, capital gain, estate and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.