In deciding how to give, donors have an increasing number of options at their disposal. The variety, however, can be daunting. While the right giving vehicle is out there, too many choices can breed confusion and leave donors wringing their hands, each palm weighing a hefty pile of pros and cons. Who will manage my money? How will it be invested? What will be my legacy?
Fortunately, with the right team of advisors, navigating the road becomes much easier. The Foundation for Enhancing Communities (TFEC) not only offers an array of giving options, but also supplies the expertise and assistance to ensure that you and your clients select the option best suited to their needs. TFEC works closely with you and your clients to streamline the giving process, offering assistance with:
- Providing information on community needs, and which local agencies and programs make the greatest impact
- Delivering grantmaking expertise and a range of administrative services related to charitable giving
- Facilitating complex forms of giving and executing technical giving instruments
- Identifying clients’ charitable giving interests and motivations
- Matching personal charitable interests with tax planning needs
- Creating and implementing charitable plans that are integrated into major business, personal, and financial decisions
- Whether you are an expert on the charitable sector or not, we know that you are an expert on your clients’ needs. TFEC respects and adds to the relationship you have already developed. A client’s trust is paramount — TFEC can help strengthen the bond between advisor and donor with our collaborative approach to charitable giving.
TFEC also offers ongoing education for advisors regarding the charitable sector, including hosting expert speakers, disseminating a periodic newsletter and providing access to our expert counsel.
One charitable option we offer donors is a Charitable Remainder Trust.
Summary:
A Charitable Remainder Trust is a planned giving tool that enables a donor(s) to make a charitable contribution today and realize a large tax benefit initially, while receiving taxable income from the trust during their lifetime(s). These agreements are legal arrangements where donors can transfer assets irrevocably to a Trust, which then invests it and creates these two interests. Donors typically establish these planned giving vehicles in order to increase the impact of their charitable gifts, receive a lifetime income, and/or qualify for income, gift and estate tax benefits.
Numbers at a glace:
Charitable Remainder Trusts, established with TFEC, must have a minimum $50,000 contribution requirement to qualify for an annual beneficiary distribution; likewise, a minimum $100,000 contribution is required to qualify for a quarterly beneficiary distribution. A 0.6% investment management fee and 0.4% administration fee is assessed on all Charitable Remainder Trusts under $500,000.
Example:
A couple, both 70 years old, transfers $100,000 in common stock to a Charitable Remainder Unitrust (or CRUT). The stock has a cost basis of $50,000 and pays an annual dividend of 2%. According to the terms of the trust agreement, the Trust makes a 6% yearly payment to the two of them, as the beneficiaries, for 15 years. When the Trust matures in 15 years, the balance of the Trust transfers to a TFEC fund for charitable use as specified by the donors.
With this gift plan, the donors accomplish the following objectives:
- Make a larger gift which would not be feasible with loss of income
- Triple the income from the asset given (the stock pays 2% in annual dividends, while the Trust provides 6% yearly)
- Avoid capital gains tax on the appreciation of the stock, saving $7,500 in federal tax (based upon 15% capital gains rate)
- Receive a federal income tax deduction of $41,657 in the year the trust is established (assuming an income tax rate of 28%)
More information:
For more information about Charitable Remainder Trusts, please contact Janice R. Black, President and CEO, at jblack@tfec.org.
