A charitable remainder trust allows you to provide income to yourself or others for life or a term of years while making a generous gift to Lake-Geauga Habitat for Humanity. The income may continue for the lifetimes of the beneficiaries you name, a fixed term of not more than 20 years, or a combination of the two.
HOW DOES IT WORK?
You irrevocably transfer assets, usually cash or securities, to a trustee of your choice (for example, The Cleveland Foundation, which administers charitable remainder trusts for Lake-Geauga Habitat for Humanity). During the trust’s term, the trustee invests the assets. Each year, the trustee provides a cash payment to one or more income beneficiaries named by you. The payment must be at least 5% of the trust’s initial value, but can be much higher depending on how long the trust term is expected to be. Payments are and are made out of trust income and appreciation, or trust principal if income is not available.
When the trust term ends (or the donor dies), the trust’s principal passes to Lake-Geauga Habitat for Humanity.
Stream of income for life or a predetermined number of years
Current charitable income tax deduction
Reinvestment of appreciated assets without erosion by capital gains taxes
Removal of assets from your taxable estate
THERE ARE 2 TYPES OF CHARITABLE REMAINDER TRUSTS
1.) Charitable remainder annuity trust
2.) Charitable remainder unitrust
These two trusts are essentially the same. The major difference is that the charitable remainder trust will pay a fixed dollar amount each year. The charitable remainder unitrust has a variable payout, based on a percentage of the assets of the trust, determined each year.
A unitrust provides additional flexibility because you can add assets to the trust at any time.
To establish either of these trusts, contact your attorney or financial advisor.