Charitable Remainder Trust Calculator

Hess-Verdon – #1 California Trust and Estate Law Firm.

A Charitable Remainder Trust calculator will assist you to know how much to gift into a CRT.

What types of charitable remainder trusts are available?

1. Charitable remainder unitrusts or CRUTs
   • The CRUTs distribute a fixed percentage based on the balance of the trust assets (revalued annually) and can contribute other additional assets.
2. Charitable remainder annuity Trusts or CRATs
   • The CRATs distribute a fixed annuity amount each year, and additional contributions are not allowed.

To discuss your situation, to meet with us or to get your questions answered, please call our office to schedule an appointment: 888-318-4430.

Why should I allow a trust to manage my assets an appreciated property?

Well, there are countless examples of how a CRT works effectively, especially from a tax perspective. We would say to NOT sell any highly appreciated assets before reviewing the power of a CRT!

Concerning CRTs, what are the Pros and Cons?

Tax-exempt: You can reduce your taxes with a charitable income tax deduction. (charitable remainder trust calculator coming soon)

Now, for example, consider the following:

• Fund the CRT with cash: Donor can use a charitable deduction of up to 60% of the Adjusted Gross Income (AGI)
• Appreciated real estate assets: Up to 30% of their AGI for the tax year
• Can’t use the total deduction for the year? Can carry the deduction for up to 5 additional years.
• Can convert appreciated assets into a lifetime or retirement income stream: The CRT can be structured to defer the payment stream and provide an income during retirement
• Defer capital gains tax: Great for highly appreciated properties. You can defer the capital gains until the time it’s distributed out to the income beneficiary.
• Learn about CRT’s and how to start a private foundation.

The Benefits of a Charitable Remainder Trust

(Learn more about the charitable remainder trusts pros and cons)

After you set up a charitable remainder trust, there are two benefits for you. First, you get to earn regular income from the trust assets, and second, you reduce taxes on this income and estate taxes on the assets when you die.

In other words, the CRT:

· Reduces income taxes through an income tax deduction

· Converts all present into lifetime income

· Eliminates capital gains when assets are eventually liquidated

· Benefits a charity

· Protects assets from creditors

· Assets can grow in the trust

TYPES OF CHARITABLE REMAINDER TRUSTS

• Charitable Remainder Trust (CRT)
• Charitable Remainder Lead Trust (CLT)
• Charitable Lead Annuity Trust (CLAT)
• Charity remainder-annuity trusts (CRATs): The income beneficiaries are guaranteed a fixed amount from all assets in the trust as yearly income for their lifetime or 20 years. With a CRAT, the income earned from the trust is constant and immune to fluctuations in the economy or changes due to the performance of the investments.
• Charitable remainder-unitrusts (CRUTs): If the CRT is created as CRUT, the income beneficiaries receive a specific percentage (at least 5 %) of the assets in the trust. The amount received by the grantor or named beneficiaries during their lifetime varies based on the performance of the trust’s assets.

Charitable remainder trust distribution rules

· Payments must be set as a fixed annual amount or as a fixed percentage of the yearly trust value as in a CRUT.

· The CRT can have inflation adjustments for payments, but this benefit eliminates charitable deductions

· The IRS rules demand that CRT payments be between 5-50% of the trust’s assets

· As the grantor, you receive an instant income tax deduction that is equal to the current value of the projected remainder interest that goes to the charity

Key considerations for a CRAT:

· The Charitable Remainder Annuity Trust or CRAT pays a fixed income stream

· The income is a percentage of the CRAT asset’s market value

· This payment doesn’t change in the term of the trust; thus, the term annuity

· If you fund the CRAT with $2 million and you choose a 5% annuity payment, this trust will pay you a fixed $100,000 every year

· The CRAT payments rarely surpass 15%

· You cannot add new assets to the CRAT after you create it

 Key considerations for a CRUT:

· The payments are a fixed ratio of the dynamic market value of the assets

· The yearly income stream fluctuates as the current value of the assets change

· You receive more pay when the assets grow and less money when the CRUT investments dive

· If you funded the CRUT with $2 million, and you choose 10 % as the payout, in the first ear, you would get $200K

· If in the second year the CRUT assets appreciate to $3 million, the payout will be $300K

· If in the fourth-year assets fair market value dropped to $1million, the payout will be $100K

Why Consider hiring Hess-Verdon as your CRT Attorneys

We work efficiently to help individuals, families, fiduciaries, organizations with the following:

• Trustees
• Beneficiaries
• Individuals and families
• Banks
• Trust Companies
• Charitable entities
• Family Offices
• Corporate Fiduciaries
• Corporate Trustees
• Business Owners

Overview (CRT Calculator coming soon)

The CRT is good for you if you wish to preserve the value of your appreciated assets. This trust empowers you to turn long-term trusts into an income-generating property. When the trust sells the assets that are put into it, the sale is exempt from taxes. By avoiding capital gains taxes, more money goes to the income and charitable beneficiaries.

The CRT investments are exempt from tax. That makes the CRT a worthwhile vehicle for asset diversification. You can also use it to take care of your heirs for their entire life—it helps you prevent the risk of spendthrift heirs running down your estate. Contact a trust attorney for help with all issues relating to a charitable remainder trust. Call (949) 706-7300.