planned-giving

“Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.”  - Luke 6:38

As a recipient and steward of God’s bountiful gifts, you have an obligation and opportunity to share and return those gifts, providing support to God’s church and ministries beyond your lifetime.

CHARITABLE REMAINDER TRUSTS

A trust, of which there are many types, is simply a legal document appointing someone to manage assets (the trustee) for the benefit of someone (the beneficiary). The beneficiary can be the creator of the trust (the trustor) or others that the trustor might name. The benefits are two-fold— payment of income to a beneficiary(ies) and principal to a remainderman(men).  A trust is not, by nature, complex and expensive. 

A Charitable Remainder Trust is a type of trust which you do not need to be very wealthy to use and which will benefit Sharon Presbyterian Church as well as you and your family. It consists of an irrevocable gift of assets into a charitable trust that provides you a fixed or variable income for life or for a set term. At the trust's termination, the trust assets become a gift to Sharon Presbyterian Church.

THERE ARE TWO TYPES OF CHARITABLE REMAINDER TRUSTS:

Annuity Trust: An annuity trust pays a predictable, fixed dollar amount – at least 5% of the fair market value of the donated assets at the time of the gift.  Any income not paid out is added to the principal.  If income is insufficient to pay the required amount, the principal is invaded to make up the deficit.  Your income tax deduction depends upon your age, the age of other beneficiaries (if any), the agreed upon percentage of the trust, and fair market value of the assets donated.  Once again, there is no capital gains tax on this gift of appreciated property. Additional contributions to the trust are not permitted. The annuity trust is a good fit for individuals who need a reliable fixed amount of income.

charitableremainderannuitytrust_500x166

Example: Mr. Donald owns appreciated stock from the company for which he was a lifetime employee.  He donates these securities to establish an annuity trust with a value at the time of the gift of $267,000, naming himself and his wife as lifetime beneficiaries.  The trust agreement provides for annual payments to the couple and then to the surviving spouse of $16,020, or 6%.  The annual payments are taxable.  At the death of the surviving spouse, the remainder of the trust’s assets go to Sharon Presbyterian Church for the purposes designated by Mr. Donald.

Unitrust: A charitable remainder unitrust pays a variable income.  An agreed upon percentage (at least 5%) of the fair market value of the trust’s assets, as valued each year, is paid annually.  You may elect a “standard unitrust” where excess earnings are always reinvested in the trust, and in which principal is invaded to pay the elected percentage rate when earnings are insufficient to do so.  Or you may choose a “net income unitrust” where either the agreed upon percentage or the actual income from the trust is paid, if the income is less than the agreed payout. The tax considerations are the same as an annuity trust.  However, a unitrust can be more flexible. A unitrust can also provide a hedge against inflation.  One variation allows for more growth while another provides more income.  It is simply a matter of what you want to accomplish, as well as the beneficiary’s lifetime needs. Also, the document can be drafted so that you can make additional transfers of assets into the trust at any time.

charitableremainderunitrust_500x167

Example: Mr. Fulton transfers the two stocks he bought 40 years ago into a net income unitrust with an annual payout rate of 6%.  The value of the stocks at the transfer was $160,000.  The couple will receive an annual payment of 6% of the value of the trust as valued each year.  If the income on the trust amount is less than 6%, then the actual income is paid.  If the amount earned is greater than 6%, the trust principal grows by the difference. At the death of surviving spouse, the remaining principal will be paid to Sharon Presbyterian Church.

Benefits of this type of gift to You:

  • Payments are distributed for life or a fixed period to you or to whomever you designate.
  • You may be eligible for a tax deduction the year the trust is established.
  • You may avoid up front capital gains tax.
  • Trust assets are not a part of your estate.

Next Steps:

Contact us to talk more specifically about the benefits of a charitable remainder trust gift to Sharon Presbyterian Church.

Contact:

Senior Pastor Rob Blumer
Email: robb@sharonpcusa.org
Phone: (704) 553-0869

Associate Pastor Ron Nelson
Email: ron@sharonpcusa.org
Phone: (704) 553-0869

The above gift description is for informational purposes and not intended as legal or tax advice. To ensure that this form of gift is appropriate for your particular circumstances and estate planning, please consult with your professional advisers.

Last Published: September 12, 2017 9:49 AM
Steps to a Gift