Accomplish your philanthropic goals

Set up a charitable remainder trust

A charitable remainder trust is a legal arrangement that involves donating assets to an irrevocable trust to benefit charity, while allowing you (or other beneficiaries you name) to receive annual income for life or for a designated period of time. When the income period ends, the remaining assets in the trust pass to your favorite charity or charities. 

How a charitable trust works 

• Asset transfer:  You set up the trust and transfer assets (cash, stocks, real estate, etc.) to the trust. Once the assets are in the trust, they cannot be taken back.  

• Income for life or for a specified period: The trust is designed to pay you (or other beneficiaries you name) a fixed income for a set period (such as 10 years), or for the lifetime of a beneficiary. The trust invests the assets and pays you or your named beneficiary the agreed-upon income, annually or more frequently depending on the trust language.  

• Remainder to charity: At the end of the income term, the remaining assets are distributed to your chosen charities. 

Tax benefits 

• Charitable deduction: You receive an immediate income tax deduction for the portion of the gift that will go to charity after the income period ends. 

• Capital gains tax: By donating appreciated assets in-kind to the trust, you preserve the full fair market value of the assets rather than reducing it by large capital gains taxes, allowing more money for income and for charitable beneficiaries.  

Types of charitable remainder trusts 

• Charitable remainder annuity trust (CRAT): Pays a fixed annuity rate amount each year. The annuity is calculated based on the initial value of the trust assets, and future contributions to the trust are not allowed. 

• Charitable remainder unitrust (CRUT): Pays a fixed percentage of the trust’s value each year.  

Important considerations 

• Complexity: Charitable remainder trusts have significant legal and tax implications. We recommend working with a qualified attorney who is experienced in charitable planning techniques.  

• Irrevocability:  A charitable remainder trust is a legal document that is irrevocable. With very few exceptions, the trust cannot be changed once it is created. Even if your financial situation changes significantly, you cannot pull income beyond what the trust specifies.   

• Minimum contribution: This technique usually requires a donation of substantial assets to make sense.  

Alpine Bank Wealth Management can serve as trustee of your charitable trust, or as the investment manager for the trustee of your charitable trust.  Let us know if you’d like more information on these services and more. 

*Alpine Bank Wealth Management services are not FDIC insured, may lose value, and are not guaranteed by the bank. 

• December 13, 2024
• Financial
• Alpine Bank Staff

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