Charitable remainder trust …
a flexible tool for effective estate planning
A charitable remainder trust is a gift plan defined by federal tax law that allows you to provide income to yourself or others for life or a term of years while making a charitable gift.
Most financial advisers agree that it's nearly impossible to do effective estate planning for individuals with high net worth without including a charitable giving vehicle. Charitable gift plans can also help small business owners who want to maximize their retirement income while minimizing income and estate taxes.
What do I do?
To set up a charitable remainder trust, you irrevocably transfer assets (usually cash, securities or real estate) to a trustee of your choice. The trustee sells the trust assets (if the trust is funded with securities or real estate) and invests the proceeds.
What happens next?
Each year, the trustee distributes payments to you or other income beneficiaries named by you. Payments must be at least 5 percent of the trust's value and may be paid out of trust income or principal.
How does Oregon Food Bank benefit?
At the end of your lifetime (or at the end of a term of years), the remaining principal passes to Oregon Food Bank. If you don't designate a specific use for the gift, OFB will add it to its Quasi-Endowment Fund. The quasi-endowment provides a source of long-term funding to fight hunger in Oregon and Clark County, Wash.
How much income can I receive?
One of the most attractive features of a charitable remainder trust is its flexibility. There are two general types of charitable remainder trusts:
A charitable remainder unitrust allows you to receive a fixed percentage of the trust's value, revalued annually. As the trust's value grows, your annual income distribution grows to keep pace with inflation. Annual payments must be at least 5 percent of the trust's value. When you set up the trust, you can include provisions that give you flexibility to defer income until later years.
A charitable remainder annuity trust specifies a fixed dollar amount to be paid annually to you or other income beneficiaries you name. The fixed amount must be at least 5 percent of the trust's initial value. Payments come from trust income or trust principal if income is inadequate. The payment amount won't change, regardless of changes in the value of the trust.
A charitable trust is a flexible tool that can be structured to meet your needs. OFB's planned giving staff can help you and your advisers in the planning process.
Questions?
For more information, call Gina Taylor, 503-419-4193 or e-mail
gtaylor@oregonfoodbank.org.
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