Long Island Elder Law & Estate Planning

What Is the Value of a Charitable Remainder Trust?The process of estate planning can grow into a more comprehensive form of planning called legacy planning. When you are contemplating your legacy, you may decide that you want to set aside something for charitable causes. There are a number of different ways that you can proceed if you have philanthropic aims.

Private Charitable Foundations

Some people create private charitable foundations. We have all heard of high-profile foundations like the Ford Foundation, the Rockefeller Foundation, and the Bill and Melinda Gates Foundation.

When you hear these names attached to foundations, you may assume that you must be a billionaire to create a foundation. In fact, when you do the research, you find that most of the foundations in the country are funded with less than $1 million.

A private foundation isn’t for everyone, but if you are in a position to leave behind a legacy of charitable giving, you may want to consider the creation of your own foundation.

Donor Advised Funds

If you don’t want to incur the expenses that go along with the creation and maintenance of a private foundation, donor advised funds are a viable option. When you contribute assets into a donor advised fund, you make recommendations with regard to how you want the assets distributed.

You could ultimately assist multiple different charities, but you only make a single contribution into the fund. Because many people use the fund, the overhead is shared, so the costs are relatively low.

Charitable Remainder Trusts

There are certain types of trusts that are used for philanthropic purposes, and they also provide tax advantages. One of them is the legal device called a charitable remainder trust.

When you create a charitable remainder trust, you name a charitable beneficiary. The charitable beneficiary must receive at least 10 percent of the value of the trust after the trust term expires.

You would typically act as the non-charitable beneficiary, and you receive annuity payments throughout the term of the trust. The amount of the payments is up to you. With a charitable remainder unitrust you receive a percentage of the whole. It must be at least five percent annually and no more than 50 percent annually.

There is another type of charitable remainder trust called a charitable remainder annuity trust. When you have a charitable remainder annuity trust you receive a fixed sum each year rather than a percentage.

Charitable remainder trusts provide a number of different tax advantages. There is a charitable deduction, and you are removing assets from your taxable estate when you fund the trust.

You can also realize capital gains tax advantages under certain circumstances.

Schedule a Free Consultation

To learn more about charitable remainder trusts and other estate planning tools, contact us through this link to schedule a free consultation: Smithtown NY Estate Planning Attorney.

Latest posts by Mark S. Eghrari, Estate Planning Attorney (see all)

About Mark S. Eghrari, Estate Planning Attorney

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.