
One of the main reasons people give to charity is for
their ego or image—they want to be seen in the community as philanthropic. Another main reason some donate is for the tax breaks. Others give to charity for truly altruistic reasons. Yet others leave money to charity because they believe their heirs are sufficiently provided for. For whatever reason they donate, many people want to incorporate charitable giving into their estate plan. For them, a charitable trust may be a perfect fit, since it can be an effective way for clients to achieve one or all of these goals: give money to charity, provide a limited monetary benefit to themselves or their heirs, and receive potentially substantial savings in income, estate or gift taxes.
Your CPA adviser should be able to discuss not only which type of charitable trust is most suitable for you but also should know these trusts’ impact on income and transfer taxes (see chart below). Contact us for more information on charitable trusts and how we may help you decide what type of trust might be right for you.
| CRT | Charitable Remainder Trust | Pays amounts to noncharitable beneficiaries and a remainder to charitable beneficiaries. |
| CRAT | Charitable Remainder Annuity Trust | A CRT that pays a fixed amount each year to noncharitable beneficiaries. |
| CRUT | Charitable Remainder Unitrust | A CRT that pays a fixed percentage of the FMV of the trust’s assets to noncharitable beneficiaries. |
| NIMCRUT | Net Income with Makeup CRUT | A CRUT whose payments to noncharitable beneficiaries can be made up in a future year if its income falls below its percentage payout in one year. |
| CLT | Charitable Lead Trust | Pays an annuity to charitable beneficiaries and the remainder to noncharitable beneficiaries. |
| CLAT | Charitable Lead Annuity Trust | A CLT that pays a fixed amount each year to charitable beneficiaries. |
| CLUT | Charitable Lead Unitrust | A CLT that pays a fixed percentage of the FMV of the trust’s assets to charitable beneficiaries. |
| IPCLAT | Increasing Payment CLAT | Provides an annuity (initially a fixed amount or percentage) that increases during the annuity period. |
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