February 24, 2018

Remainder Trusts

Similar to an annuity, trusts provide a source of income, while also offering a remarkably versatile way to broaden your estate plan. They can provide the potential for increased life income for you and loved ones, tax benefits, and a means to support a favorite charitable organization or several different beneficiaries.

Remainder trusts are very similar to gift annuities, with a few important differences.

Annuity Trusts
A charitable remainder annuity trust (“annuity trust”) is a gift plan that allows you to provide income to yourself or others while making a generous gift to Wounded Nature – Working Veterans. The income may continue for the lifetimes of the beneficiaries you name, a fixed term of not more than 20 years, or a combination of the two.

Instead of giving your gift directly to Wounded Nature – Working Veterans, with an annuity trust you irrevocably transfer assets, usually cash or securities, to a trustee of your choice (for example, a bank trust department).

During the trust’s term, the trustee invests the assets. Each year, the trustee distributes a fixed dollar amount to your income beneficiaries. The payments must be between five percent and 50 percent of the trust’s initial value and are made out of trust income, or trust principal if income is not adequate.

Payments continue until the trust term ends or until the highly unlikely event that the trust distributes all its assets. Payments may be made annually, semiannually, or quarterly.

When the annuity trust term ends, the trust’s principal passes to Wounded Nature – Working Veterans to be used for the purpose you designate.

A charitable remainder unitrust (“unitrust”) is very similar to an annuity trust except each year the trustee distributes a fixed percentage of the unitrust’s current value, as revalued annually, to your income beneficiaries.

If the unitrust’s value goes up from one year to the next, its payout increases proportionately. Likewise, if the unitrust’s value goes down, the amount it distributes also goes down. For this reason, it may be to your advantage to choose a relatively low payout percentage so that the unitrust assets can grow, which in turn will allow the unitrust’s yearly payments to grow.

When the unitrust term ends, the unitrust’s principal passes to Wounded Nature – Working Veterans, to be used for the purpose you designate. You may add funds to your unitrust whenever you like and take an additional tax deduction.

No matter which type of life income gift you choose, both types of charitable remainder trusts allow you to increase your income and receive a substantial tax benefit in addition to supporting the mission of Wounded Nature – Working Veterans.

To include Wounded Nature – Working Veterans in a remainder trust, you can either email Rudy Socha at rudy@woundednature.org or call ph 440-452-1042.
The information on our Web site is not intended as financial or legal advice. Please consult your own qualified advisers as you consider philanthropic gifts.
Photo:  Tire being buried by tides near high tide line.  Taken by Rudy Socha


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