Charitable remainder trust
Without the support of our generous circle of givers, PacRep could not withstand the "whips and scorns of time."
A charitable remainder trust is an attractive way to achieve several goals: income for life, and the knowledge that after your lifetime the property remaining in the trust will be used by Pacific Repertory Theatre as you specify.
Two types
- Unitrust: income varies each year with the fair market value of the trust.
- Annuity trust: income payments are fixed, set when the gift is made.
Example
Mr. Edwards irrevocably transfers $100,000 to create a charitable remainder unitrust that pays him 6% of the trust's value each year. The first year he receives $6,000. A year later the trust is worth $120,000, so he receives $7,200; if it is worth $110,000 the next year, he receives $6,600. If trust income exceeds the payout, the excess is reinvested.
When to consider one
- You own a valuable asset that has grown substantially in value but produces little income: a trust can avoid capital gains tax and give you a steady income.
- You want to provide for dependents who are not able to manage an inheritance.
The benefits
- Income for life, or for the life of your designated beneficiary
- An immediate charitable tax deduction once the irrevocable gift is finalized
- Possible avoidance of capital gains tax on appreciated assets
- Possibly increased income if you give low-yielding assets
- Possibly reduced estate taxes
- Membership in the Encore Circle, the community of PacRep supporters who have made similar provisions in their estates.
We make no claims regarding the accuracy of this information or the tax consequences of your use of it. Please consult your own tax, legal or financial planning advisor.