A Charitable Remainder Trust provides substantial financial and tax benefits for the donor, as well as significant gifts to the SPLC.
When you establish a Charitable Remainder Trust, you irrevocably donate cash or property to fund the trust. You name a trustee (who can be yourself) to manage the assets and earnings, and money from the investments is used to provide regular annual income to you or as many beneficiaries as you designate.
Payments from the trust are either made for the life of the beneficiary or for a specific period of time not exceeding 20 years. At the end of the term, or upon the beneficiary's death, trust assets pass to the SPLC and any other charities designated in the trust.
Potential benefits you may receive from a Charitable Remainder Trust include:
Increased current income from appreciated assets;
A generous income tax charitable deduction for the value of the Center's remainder interest, i.e. the “present value” of the SPLC’s right to receive the trust assets when the trust ends. The present value is determined for a set date when future payments or a series of future payments are estimated to be made. That value is also discounted to reflect the change in money’s value over time and other factors such as investment risk.
The elimination of capital gains tax on any appreciated property used to fund the trust;
Savings in estate taxes and probate costs, since the value of the Center's remainder interest is removed from your estate;
Generous support to the SPLC or multiple charities in a single trust.
A Charitable Remainder Trust can provide either fixed or variable income to its beneficiaries.
For Fixed Income A Charitable Remainder Annuity Trust (CRAT) pays a fixed percentage of the trust's initial fair market value so it provides reliable, unchanging income. Market fluctuations will have no effect on payments.
An annual payout amount (no less than 5%) is set when the trust is created, and continues for the life of the trust. No additional contributions can be made to a charitable remainder annuity trust.
For Variable Income With a Charitable Remainder Unitrust (CRUT), the fair market value of the trust is re-valued annually and payments fluctuate as the value of the assets fluctuate. When the trust is created, you decide what percentage (no less than 5%) of the fair market value you wish to receive as income.
You will need an attorney to draw up your trust and you will need to select a trustee to manage it. You can serve as your own trustee or you can hire a bank, trust company, or other financial institution.
Since a Charitable Remainder Trust requires separate management, and often separate investment, it is usually not economical unless the principal initially equals or exceeds $100,000.
If you have any questions or need additional information, please call the planned giving department, toll free, at 1-888-414-7752 or contact us online.
We recommend that you consult with your attorney or tax advisor for the various tax benefits and restrictions that may apply to your specific situation. We are available to you and your advisors to answer questions or help arrange a planned gift to the Southern Poverty Law Center. The SPLC's future programs depend(s) on the partnerships we form today.