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Many of us want to leave something to charity. Some of us are in a position to give a good deal. What if you could give in a way which benefitted the charity and left you with more than if you had held onto it? Under the right circumstances, a charitable remainder trust can do just that.

Establishing a Charitable Remainder Trust

The trust must be established for the benefit of the person, or married couple, who establish it (called the “grantor”) and for the chosen charity. At least 10% of the value of the assets contributed must pass to the charity (actuarially computed). This must be no more than 60% of the grantor’s income, 30% if the charity is a private foundation.

Usually, property with zero or a very low tax basis, property which is expected to appreciate in value, is transferred to the trust. When it appreciates and is sold, the capital gains are carried out as distributions to you. If you have a life expectancy of at least 20 years, you will actually receive more money than if you held the property directly. (The breakeven point is between 17 and 18 years.)

Non-charitable Beneficiaries

This generally works for someone 60 years or younger or a couple who are both 67 years or younger.

But it only works if you and your spouse are the only non-charitable beneficiaries. You will have to provide for your children with other assets or with life insurance.

Estate planning attorney, Terry Garrett, serves on the board of the Texas Chapter of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

She assists families of people with special needs, people planning for the retirement years and people administering estates.


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