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Charitable Remainder TrustsTrusts

A charitable remainder trust can be a powerful planning tool enabling you to maximize your assets, capture and control your social capital and leave a legacy to your heirs and your community. Social capital is that portion of your income and accumulated wealth that will be used to provide for the needs of your community and which is normally taken from you in the form of taxes unless you plan properly. Consult with San Diego Human Dignity Foundation and/or your tax and legal advisors to see if this type of trust is an appropriate vehicle for you.

  1. What is it?
    It is a written, irrevocable commitment to contribute assets to a charity while retaining the rights to receive lifetime income benefits from the assets and the investment of the assets.
  2. Who can benefit by using it?
    Almost everyone can use this planning tool effectively. The ideas that this type of trust is only for the wealthy, only for older people, too difficult to implement or only for the charitably inclined are simply not true. Today, even a $2000.00 gift can be economically feasible under some circumstances.
  3. How does it affect my social capital?
    It enables you to retain dollars that would be lost in taxes and put them to work to benefit you and your family. It also allows you to redirect the retained dollars to the social, religious, community and cultural causes that you choose to ultimately benefit.
  4. Who can receive the income stream from it?
    You can receive the money during your life or you can designate another individual to receive the income. During your life, the income stream can also be directed to another trust or an estate, partnership, association, company or corporation.
  5. How does it advance philanthropy in my community?
    Upon your death, it normally terminates and all of the assets in it are transferred to your selected charitable organization(s), such as perhaps, the San Diego Human Dignity Foundation. If you choose, it can remain in existence and hold the assets for your selected charitable organization(s) and transfer the income instead. However, if you choose this option, it converts to a private foundation with all of the attendant difficulties.
  6. Is it subject to taxes?
    It is exempt from all taxes unless it has unrelated business taxable income.
  7. What are the tax consequences for setting this up?
    When you transfer asset(s) to it, you receive an income tax deduction or corresponding estate tax deduction equal to the present value of the remainder interest intended for the selected charitable organization(s). As long as the income stream is returned to you or your spouse/partner or a charity of your choice after the transfer of the assets, there is no gift tax due on the income stream. Capital gains tax can be avoided if you transfer appreciated personal property or if it sells the appreciated personal property. You will have to pay income tax on the retained income stream.

Whatever your planned giving needs may be, San Diego Human Dignity Foundation is here to assist you in any way. Contact us today. Give a gift that will give forever.


 
 
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