If you have anything left after the recent market downturn, you may want to consider the Charitable Remainder Trust. It's a government approved transfer of your assets to a recognized charity that carries significant estate planning benefits for you.
The parameters of the trust were approved by Congress in 1969 to encourage philanthropic giving. Starting slowly, use of the trust has accelerated as American personal wealth has grown over the years.
The prime advantages are:
* You have the pleasure of making a sizable donation to the charity of your choice. The trust is set up in a manner that the charity will not realize the value of your donation until after it helps you and your family. In later years, it will be a lasting legacy in recognition of your philanthropy.
* You'll immediate capital gains taxes on the sale of highly appreciated assets. Your donation to a tax-exempt charity allows that organization to sell your assets without immediate capital gains taxes.
* At the same time, you have the advantage of being able to write off your donation as a tax deduction in the year you make the donation. Your gift is irrevocable, therefore it qualifies for federal and state (check your own state for its conditions and limits) deductions.
* Transfer of your assets to a charity means they are no longer counted against the value of your estate. This means, your action reduces and possibly eliminates estate tax liabilities. Its greatest impact is on estates with a value above $675,000 (based on 2000-1 tax year).
Up to this point you may be saying that you've given everything away...what's the benefit to me?
When you make the donation, the principal amount of the gift is held by the charity. However, you and those you appoint are allowed to draw income from the account. Income interest is available in two ways...annuity interest or unitrust interest.
As an example, if the value of the trust is $500,000 and you select 10% annuity interest, you would receive an annual payment of $50,000. The unitrust pays out $50,000 the first year, but in succeeding years the amount is based on the value of the fund. If it has increased, you receive more money. If not, you may receive less.
For complete details, contact any recognized charity, or your financial advisor.
© 2012 Created by Myles Bristowe.
