Charitable Remainder Annuity Trust

A charitable remainder annuity trust is a gift arrangement whereby you transfer cash or other property to a trust; you retain a fixed dollar income from the trust for life or a period of years; and you pass the remaining value of the trust to a charity at the end of the trust term.

How does it work?

With the assistance of your attorney, you create an irrevocable trust agreement into which you place cash or other assets. You set the terms of the trust – the length of the trust, the percentage payout from the trust, the trustee, the income beneficiary, and the charitable remainder beneficiary. These terms become irrevocable upon execution of the trust agreement.

What are the benefits?

  • Income Tax Deduction: You will receive a charitable income tax deduction for a portion of what is transferred to the trust.
  • Capital Gains Tax Avoidance: If you transfer appreciated assets to the trust, the assets can be sold and reinvested without capital gains tax. As a result, 100 percent of the value of the asset can be invested to provide your desired income.
  • Higher Income Potential: Low-yielding assets can be converted, tax-free, to higher-yielding assets, to provide a greater source of income.
  • Estate Tax Reduction: The full value of the trust is excluded from your taxable estate if you and/or your spouse are the sole income beneficiary(ies).
  • Investment Diversification: Concentrated assets can be sold tax-free and reinvested into a more diversified investment portfolio.

Who manages the trust?

A trustee must be named to manage the trust assets. This might be a trust company, a financial advisor, a trusted individual, or in some cases – you can serve as trustee of your charitable trust. The trustee must ensure that annual tax reporting is completed, as well as handle the investment of the trust assets. Haggai International can serve as a trustee of charitable trusts.

Next Steps

If you have questions or to advise us of your desire to transfer mutual fund shares, closely held or restricted stock, or to create a planned gift using securities, please contact:

Daniel K. Wiseman, CFRE
Director of Advancement for Planned Giving Haggai International
4725 Peachtree Corners Circle
Suite #200
Peachtree Corners, Georgia 30092-2553
Office: (770) 810 – 1388

DISCLAIMER: The information contained on this page is for educational purposes only. The reader understands that Haggai International is not rendering legal advice and that the reader should seek independent legal counsel when contemplating estate planning decisions.



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