Planned Giving

Charitable Remainder Trusts

A charitable remainder trust allows the donor to receive income for life from his or her gift, with full assurance that the trust will eventually be used by The Community Foundation to address the charitable interests of the donor. The donor receives an immediate income-tax charitable deduction.

An annuity trust pays donors a fixed dollar amount annually based on a percentage of the fair market value of the assets placed in the trust. The payout amount remains constant, regardless of the increase or decrease in the trust assets.

A charitable remainder unitrust pays a percentage of the fair market value of the assets in the trust as revalued annually. If the value of the assets increases, trust payments also increase. If the trust value declines, so will the payout.

Donors select the person or persons to receive trust income. The donor can keep all the income, or it can be paid to the donor and another for their joint lives. When the trust ends at the death of the income beneficiary or at the end of a term of years, assets remaining in the trust establish a charitable fund.

Tax benefits
The donor receives a charitable deduction in the year the trust is created. The amount of the deduction depends on the age of the income beneficiary or beneficiaries, the value of the property placed in the trust, and the size of the payout selected by the donor.

Capital gains tax avoidance
Donors who fund trusts with appreciated property avoid capital gains tax. No capital gains tax is due when you transfer property to the charitable remainder trust and the trustee can sell the property tax-free.

Ways to use charitable remainder trusts in your financial plan
Charitable remainder trusts can also be helpful if you wish to:
1) increase current income
2) establish a supplemental source of income
3) provide income for a family member or friend
4) transfer investment and money-management responsibilities to a trustee

The flexibility of charitable remainder trusts makes them ideal charitable vehicles for many donors. The Community Foundation of Western North Carolina has all of the tools to help establish and administer charitable remainder trusts. Donors should consult their own tax or legal advisors regarding their specific situation.

We would be glad to provide more information about the options available and how the trusts can benefit you and support your charitable interests. We welcome your inquiry to Pat Smith, President, or Sheryl Aikman, Vice President, Development, at (828) 254-4960.