Below is a brief description of some of the most commonly used charitable trusts.
Charitable Remainder Trust-A trust to which you donate appreciated property. The trust can sell the property without paying capital gains tax and invest in a diversified portfolio. You receive annual income and on your death the charity receives the principal of the trust. You obtain a current income tax charitable contribution deduction.
Charitable Remainder Annuity Trust-Similar to the Charitable Remainder Trust, this trust makes payments to you based on annuity payments-a fixed percentage of the initial value of the assets contributed.
Charitable Lead Trust-A trust to which you give money or property. One or more charities will receive an annual annuity payment. Your designated heirs will receive the principal of the trust when it ends. This can help you achieve substantial gift or estate tax benefits on transferring assets to heirs.
Charitable Remainder Unitrust-A charitable remainder trust that makes payments to you based on a fixed percentage of the value of the assets owned by the trust each year. This is usually used where assets are easily valued, such as publicly traded stocks, not for interests in real estate or closely held businesses that would require a formal appraisal.
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