Charitable trusts are remarkably flexible planned giving arrangements that provide a wide variety of tax benefits to the donors. These trusts are fairly complicated and require drafting by a skilled attorney. Because of the set-up costs, they are used mostly for gifts in the $500,000 and up range. There are two basic types of charitable trusts: Charitable Remainder Trusts and Charitable Lead Trusts.

A charitable lead trust (CLT) is usually used to reduce or eliminate estate taxes. After a donor transfers assets to a CLT, the trust will make annual payments to Metropolitan Ministries for a term of years, usually 15-25 years. At the end of the term, the trust assets then pass back to family members, usually children or grandchildren. The annual payouts to the foundation provide an estate tax deduction and greatly reduce the estate tax that would otherwise be levied on the assets placed in the trust.

Charitable Remainder Trusts

You may fund a charitable remainder trust (CRT) with many different types of assets, including cash, stock, real estate, and even closely-held business interests. The CRT, which has been specifically approved by the United States Congress, is an irrevocable trust. Once you fund the trust, you will receive income payouts from the trust for life. At the end of your life, the assets in the trust will go to Metropolitan Ministries. Because the trust is irrevocable, you receive an income tax deduction when you fund it, even though you enjoy the income for life. You can also defer capital gains tax and often reduce or eliminate the estate tax.

Questions? Call John Morgan – work: 813.209.1092 | cell: 727.423.4000.