Charitable Remainder Trust

Charitable Remainder Trust

With a charitable remainder trust, one places assets into an irrevocable trust and names a trustee, perhaps a bank trust department. The trustee then invests the assets with the purpose of increasing the trust value on a tax free basis. The trust then pays the individual or designated family members an income for life or for a set period of years. When the last income beneficiary dies or the trust’s term ends the trust is dissolved and the remaining assets are given to the Calumet Theatre. During the life of the trust the designated beneficiary (s) may receive a fixed or variable income.

For an example of how a charitable remainder trust works, consider the story of a Mr. and Mrs. Smith. They are 74and 70 years of age, respectively, and they own appreciated stocks which have grown in value more than 20 times over the last 12 years. They have received no dividends from these stocks. They want to increase their income for retirement and make a gift upon the last survivor’s death. They transfer the stock into a charitable remainder annuity trust and direct that it pays 7 percent of the net fair market value of the stock annually. As a result, they will make a gift to their favorite charity, avoid capital gains tax, receive an income tax deduction at present value and exchange a non-income-producing asset for a an annual income for life.