 |
NEWS | DIRECTORIES | CALENDARS | SITE MAP | SEARCH | |
||||||||||||||||||||||||||||||
|
 |
|
||||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||||
|
|
|
Trusts Do you want to make a substantial gift to Susquehanna while also providing lifetime income for yourself or your beneficiaries? Then a charitable trust may be the right method of giving for you. A trust is a legal entity that holds and invests assets on behalf of the trust's beneficiaries. There are several forms of charitable trusts that offer tax and financial planning benefits. Charitable Remainder Trusts The charitable remainder trust (CRT) is an irrevocable trust wherein the donor transfers assets to a trust and the trust pays the donor, or any designated beneficiary, income for the rest of their life or for a set term of years not to exceed 20. At the end of the trust the remainder of the principle goes to the charity or charities selected by the donor for previously agreed upon purposes. It is a popular plan because of the financial and estate-planning flexibility it offers. Charitable remainder trusts often allow the donor to make a larger gift than they might have imagined and offer the following benefits:
Charitable Remainder Unitrust (CRUT): The donor selects a fixed percentage rate of income to be paid from the trust. If the investment return on the trust exceeds the payout rate to the donor, the principle of the trust grows and future payouts grow, as well. However, if the investment performance falls short of the payout rate the principle declines in value and future payouts also decrease. The donor determines the fixed percentage in consultation with financial or legal advisors and the trustee. Payment must be at least five percent of the value of the trust assets. Depending on the donor's estate planning objectives, he or she may emphasize the charitable deduction by choosing a lower rate or the annual return by selecting a higher rate. The unitrust payment must be made annually or more frequently to the donor and/or another beneficiary for life. Alternatively, the unitrust may be set up for a term of years not exceeding 20. The donor is allowed a charitable deduction equal to the present value of the charitable organization's remainder interest in the unitrust based on the fair-market value of the asset transferred, the payout rate chosen, and the age and number of beneficiaries (or the term of years). Funding the unitrust with appreciated, long-term, capital-gain securities or real estate can increase the tax benefits. Charitable Remainder Annuity Trust (CRAT): The donor selects a fixed amount of income from the trust. This amount will not change throughout the duration of the trust and must not be less than five percent of the initial fair-market value of the gift in the trust. The fixed-payout feature of the annuity trust makes it particularly suitable for a beneficiary who needs the security of a specified payment. Both the annuity trust and the unitrust offer similar benefits including deductions for the present value of the charitable remainder interest and avoidance of capital-gain tax on the transfer of appreciated, long-term, capital-gain property. Charitable Lead Trust (CLT): A lead trust is essentially the inverse of a remainder trust. With a lead trust the annual payout is made to the charity for a fixed term of years. At the end of the trust the remaining principle is distributed to beneficiaries chosen by the donor. The primary benefit of a lead trust is in the significant reduction of gift and estate taxes in passing along assets to heirs. The lead trust is best used if the donor's estate is well above the estate tax exemption. Note: under current law the estate tax exemption increases to $3.5 million in 2009 and there is projected to be no estate tax in 2010. However, the estate tax exemption is scheduled to return to $1 million in 2011. Student Life | Athletics | Support SU | Faculty/Staff |
|
 |
|
||||||||||||||||||||||||||
