Charitable Remainder Annuity Trust

 

A charitable remainder annuity trust allows you to make a substantial gift of cash or securities and receive a fixed income determined by a percentage of the initial market value of the trust assets.  Any change in the trust's market value will not impact the fixed annual amount paid to the trust's income beneficiary(ies).

The initial trust value is established by the net fair market value of the assets. At the time the trust agreement is drafted, you choose who will receive the income distributions. You may designate yourself and your spouse as income beneficiaries or you may wish to name your children or other loved ones.  When the specified income distribution period ends, the remaining trust assets are distributed to the ELCA ministries you have designated.


Tax Benefits
In addition to providing for yourself, your loved ones and ELCA ministries, charitable remainder trusts provide tax benefits. 

In the year of your gift, you receive a charitable deduction for the present value of the calculated charitable remainder of the assets initially given.  If your deduction exceeds what you may deduct in the year of your gift, the remaining portion can be carried forward for up to five years.

A gift of appreciated assets allows you to bypass the capital gains taxes. Your appreciated asets are placed in the charitable remainder trust.  The ELCA, as trustee, sells the assets and invests the proceeds to meet the requirements of the trust.  Because the trust is considered a tax exempt entity, no capital gain tax is paid upon the sale of its assets.  In order to take advantage of this bypass, you must place the assets in the trust before they are sold.

Reduce or eliminate estate taxes and probate costs.  Your gift to a charitable remainder trust is irrevocable.  When an individual or married couple are the only income beneficiaries, the estate will receive a deduction for the value of the corpus.  If there are other income beneficiaries, the estate tax benefits may be reduced. 

Disclosure Statement

Here to help
Our nationwide network of professional gift planning staff can help you explore a variety of possibilities for making a significant gift to ministry and fulfilling your legacy goals at the same time. 

The examples and information listed above are for illustrative and educational purposes only and should not be considered tax or legal advice. Please consult with your tax or legal advisor about proceeding with your estate plan.