Planned Giving / Charitable Remainder Trusts

A Charitable Remainder Trust distributes income to a donor or other beneficiaries for their lives or a specified term of years (a maximum of 20 years), with the balance of the trust assets available for Amigos de Vamos Adelante’s use at the end of the trust.

Charitable remainder trusts offer many opportunities to address specific goals and situations for donors. For example, a charitable remainder trust established for a term of years can assist in funding the costs of attending a university. Also, charitable remainder trusts are frequently used as a means of providing supplemental income during retirement, and can be especially attractive as a way to convert appreciated, low-yielding assets into a high-yielding diversified portfolio without incurring capital gains tax. A donor to a charitable remainder trust receives a partial charitable deduction equal to the value of the charitable remainder interest.

Charitable remainder trusts take two basic forms: the charitable remainder unitrust and the charitable remainder annuity trust.

A Charitable Remainder Unitrust pays income based on a percentage of the fair market value of the trust assets as determined annually. Because a unitrust pays a variable amount of income based on the annual market value of the trust assets, this form of charitable remainder trust can be an effective hedge against inflation. When the value of the trust principal increases, so will the donor’s income. Similarly, when the value of the trust principal decreases, so will the donor’s income.  There are a number of variations of charitable remainder unitrust, including “net income” unitrusts, “net income with make-up” unitrusts, and “flip” unitrusts, which may provide opportunities for the deferral of income.

A Charitable Remainder Annuity Trust pays income based on a percentage of the initial value of the trust and never changes. Since the annuity payment does not change during the term of the trust, an annuity trust provides the certainty of a fixed amount of income each year regardless of any fluctuations in the value of the trust assets.


For more information please contact us.