Is a Charitable Remainder Trust the Right Option for You?
If you have ever thought about making a planned gift to your favorite charity, but are not ready to lose that retirement income? Then perhaps a charitable remainder trust (CRT) is right for you. A CRT irrevocably transfers money, property or other assets to a designated trustee with instructions to pay income to one or more beneficiaries (you or a loved one) over a period of time. At the conclusion of this period the trusts remaining assets transfer to one or more charities of your choice. In addition to the income a CRT can generate, there are several other benefits to establishing a trust of this sort, including a charitable gift tax deductions, tax exemptions on the trust’s investment income and possible estate tax deductions.
There are two different types of CRTs you can establish: a charitable remainder annuity trust and a charitable remainder unitrust. Both share the benefits listed above; however, there are some differences you need to consider when deciding which option is the best for you.
Charitable Remainder Annuity Trust
A charitable remainder annuity trust provides for the payment of a fixed-dollar amount to the designated beneficiary(ies) on an annual or more frequent basis.
The amount of the annual payment must equal at least 5% of the initial fair-market value of the trust. Because the annual payment amount is fixed, additional gifts to a charitable remainder annuity trust are not permitted. At the death of the last beneficiary, the trust principal is distributed to the designated charity(ies) of your choice.
Charitable Remainder UniTrust
A charitable remainder unitrust provides for annual payments to the designated beneficiary(ies) of a specified percentage equal to at least 5% of the value of the trust as it is valued each year. Because the value of the trust’s assets may vary from year to year, the payment can also vary, but the donor does have the flexibility to make additional gifts to the trust over time.
At the death of the last beneficiary, the trust principal is then distributed to the designated charity(ies) of your choice.
There are many different types of planned giving vehicles to consider. If you are interested in making a planned gift to the Cleveland Museum of Art we encourage you to visit www.clevelandart.giftplans.org to explore your planned giving options. If you would like to speak to a member of our staff, please contact Diane M. Strachan, CFRE, at 216-707-2585 or dstrachan [at] clevelandart [dot] org or Jessica Anderson at 216-707-2198 or janderson [at] clevelandart [dot] org.