Why make a gift to Dartmouth Health and/or Geisel School of Medicine at Dartmouth using a Charitable Remainder Trust?
You have accumulated an investment portfolio over a lifetime. The assets have substantially appreciated in value and worked well for you, but your financial goals are evolving. You now want a source of income without the time, effort, and complexity of managing your investments. If you sell the assets you’ll lose much of the gain to taxes.
Consider achieving your objectives with a gift to either a Charitable Remainder Unitrust or a Charitable Remainder Annuity Trust.
The benefits of establishing a Charitable Remainder Trust
A Charitable Remainder Trust will likely help you to achieve your goals. The trust is tax-exempt, so all investment transactions within the trust are free from taxes. When you transfer appreciated assets into the trust no taxes are due. You will receive a generous income tax charitable deduction for a portion of the value of the assets. You name those individuals to receive income from the trust. You also name the charities to receive any remaining assets when the trust terminates.
In many cases you will receive more income than you are currently getting from those investments you
contribute to the trust. If you want trust distributions of a fixed amount on a set schedule (often quarterly), then a Charitable Remainder Annuity Trust is right for you. If you want the possibility—but not the guarantee—of having your trust distributions increase over time, then a Charitable Remainder Unitrust might meet your objectives.
How a Charitable Remainder Trust will work for you – and for Dartmouth Health and/or Geisel School of Medicine at Dartmouth
- A trust agreement is prepared meeting IRS requirements for the trust to be tax-exempt.
- You select a trustee to administer the trust. You can be the trustee, but it is customarily a bank or investment brokerage company. Some charities will serve as trustee.
- You name both the individuals to receive income from the trust and the charities to receive the remaining assets when the trust terminates.
- You and the trustee sign the trust agreement.
- The trust agreement states a pay-out rate to calculate your annual distributions, typically in the 5% to 6% range.
- You transfer cash or appreciated assets to the trust and receive an income tax charitable deduction for a portion of the fair market value of the assets.
- In most cases for appreciated assets the trustee sells the assets. No capital gain taxes are due.
- The trustee invests the proceeds from sale to enable the trust to meet income and charitable objectives.