Charitable Remainder Trusts

A Charitable Remainder Trust is a legal instrument into which your client transfers irrevocably the ownership of assets such as securities or real estate. In return, your client receives an immediate charitable income tax deduction and the right to receive an income. The income payments may be made to your client and/or one or more other loved ones for life or for a limited number of years.

When the trust ends the property remaining in the trust (the charitable remainder) passes to the Nebraska Community Foundation to be used according to your client’s directions to benefit their hometown or other favorite charities.

Types of Trusts

Your client can elect to receive a fixed-dollar amount of income called an Annuity Trust. Or, choose to receive a specific percentage of the property in the trust, called a Unitrust. If the value of the property in this type of trust increases, the income will increase. If the value of the property in this trust decreases the income will decrease.

Requirements of Trust

A Charitable Remainder Trust requires a trust document outlining how the trust will operate. A legal advisor should draft this document to assure that it complies with current laws.

In addition, your client may serve as the manager, or “trustee,” of their own trust. However, many Nebraskans choose to engage the services of a professional trustee to handle the details of managing a Charitable Remainder Trust.

What a Charitable Remainder Trust can do

• Give the satisfaction of making a gift today that will be invested in their hometown in the future.
• Bypass capital gains taxes on gifts of appreciated assets.
• Provide tax-free growth of assets, increasing the value of your trust.
• Increase your income from low yielding investments or property.
• Provide a guaranteed fixed income.
• Pay a variable income as a hedge against inflation.
• Create an immediate charitable income tax deduction.
• Relieve your client of the burdens of management of their assets.
• Allow additional contributions.
• Reduce estate taxes and settlement costs.