Charitable Remainder Trust
A charitable remainder trust is an option that allows you to use assets that have greatly appreciated in value such as real estate and stocks into lifetime income. This type of trust can help you to save money in taxes while benefiting a charitable organization such as Wild at Heart Horse Rescue.
To create a charitable remainder trust, appreciated assets such as stocks, bonds, real estate or cash are transferred from your estate into the name of an irrevocable trust. The trustee of the trust would be a financial advisor or a financial institution. They would sell the assets at their fair market value and invest the proceeds. You would receive this income for a set number of years. At the end of the term, or when you pass away, the remaining balance would be gifted to Wild at Heart Horse Rescue.
This type of trust benefits you in several ways over making a donation in your will.
When your money is invested in a charitable remainder trust, the tax savings and income can be invested to pay for life insurance, fund your retirement or supplement your income. You can choose between receiving a fixed return based on the initial investment (Charitable Remainder Annuity Trust or CRAT) or a variable return based on the value of the assets of the trust calculated at the beginning of each year (Charitable Remainder Unitrust or CRUT).
There are several tax benefits of a charitable remainder trust. These include:
- It reduces or eliminates estate taxes.
- Income is spread out over time, reducing the taxes you pay on the gain.
- No capital gains taxes are due when the asset is sold.
- More income is received over your lifetime than if the asset was sold.
If you bought a piece of real estate or stocks that have significantly increased in value, you may owe thousands of dollars in capital gains tax. The bottom line is that with a charitable remainder trust, you’re eligible to take a charitable tax deduction for the value of the charitable donation while saving capital gains tax on the value the asset appreciated.
If the value of the assets is put into a trust, the entire amount can be invested, not what’s left after capital gains taxes are deducted. You receive a percentage of the trust’s value annually and you’re eligible for the federal income tax charitable deduction the year you fund the trust.
Make Wild at Heart Horse Rescue Part of Your Estate Planning
Not only do you receive significant tax benefits with a charitable remainder trust, but when you make Wild at Heart Horse Rescue part of your estate planning, you also have the satisfaction of knowing you’re making a difference in the lives of rescued horses. You receive a tax deduction and an income stream and Wild at Heart Horse Rescue becomes your beneficiary without having to go through probate.
Wild at Heart Horse Rescue is a nonprofit organization with no paid employees. The funds needed to run the organization come from generous donors just like you.