A Brighter Future Lies in Trust
You can create a special kind of trust today – a charitable remainder trust – that will have a vital impact on the camp’s future… and yours.
Just what is a charitable remainder trust? Basically, it is a trust in which you irrevocably place cash, securities, or other property, but keep a specified income – usually for life. When the trust ends, the property in the trust passes to qualified organizations, much as if you had left it in your will. But because you chose to “accelerate” your bequest by means of a trust, Uncle Sam says you are entitled to a substantial income tax charitable deduction. The exact amount of the deduction will vary depending on your age and the amount of annual income generated from the trust, and it can range from 30% all the way to more than 75% of the asset placed in trust.
Depending on how you arrange your trust, many other advantages are possible:
- Increased income for you or your family
- Capital gains tax avoidance
- Estate tax avoidance
- Favorably taxed income
- Deferral of income until retirement
- Diversion of income to a family member in a low tax bracket
- Estate tax savings
- Professional investment of your funds
- A hedge against inflation
- Reduced estate settlement costs
- Meaningful support for Lakeview Ministries or other charities you value
The Annuity Trust and the Unitrust
Charitable remainder trusts come in two flavors: annuity trusts and unitrusts. Both trusts provide for payments to one or more individuals for life or for a period of years, with the principal ultimately passing for the benefit of Lakeview Ministries.
The annuity trust must provide that a fixed dollar amount equal to at least 5% of the value of the asset you place in trust be paid annually to the income beneficiary you designate.
The unitrust, instead of paying a specific dollar amount to the income beneficiary, provides that a specific percentage (minimum 5%) of the value of the property in trust be paid annually. If the value of the trust increases, the payout will increase, too. Decreases are also possible.
Gifts That Solve a Problem
Friends who support our ministry expect that their gifts will help us face the challenges of the future. But wise donors and their advisors often plan gifts in trust that also meet a wide range of personal and financial needs as well.
- A successful executive was limited on the amount she could contribute to her 401(k) retirement plan, but she was able to supplement these savings, take partial deductions, and defer substantial income until retirement through a charitable remainder unitrust. By funding her trust with appreciated securities, she also saves capital gains taxes that would be due if she sold the stock.
- A grandmother used a charitable remainder annuity trust to provide income to her grandchildren during their college years. This plan amounted to a private scholarship, providing substantial college funds to the children plus charitable deductions for the grandmother.
- A doctor who had sent monthly checks to his aged mother switched to a charitable remainder trust that paid income first to the mother and later to himself, for life. He received a substantial income tax charitable deduction and now the payments to Mom are made from a tax-exempt trust.
- A farmer whose children had moved to the city wished to retire and sell his farm, but capital gains taxes stood in the way. He escaped from this “locked-in” position by deeding the land to a tax-exempt charitable remainder trust. The trustee sold the property, avoided all capital gains taxes and is paying the farmer and his wife income for life. The farmer received a large tax deduction, too, because the trust assets will go to a favorite charity when the trust ends.
- A retired couple grew weary of the burdens of managing the investments in their portfolio. They transferred stocks and bonds to a unitrust and now have the services of an experienced trustee (money manager) who sends them quarterly checks that make their golden years even brighter.
We would be glad to assist you in planning gifts in trust that have truly remarkable consequences for you, your family, and future generations of Lakeview campers.