Charitable Remainder Trusts

Charitable remainder trusts provide flexibility when planning your estate, and offer a means of directing your assets and making future gifts to a charitable organization you support such as Shepherds of Good Hope Foundation.

 

A charitable remainder trust can be funded by cash, securities or real estate. Assets are placed with a trustee – an individual or entity capable of managing the trust expertly. You receive the income generated by the assets in trust according to the terms set out at the time the trust is established. The capital remains intact, however, Shepherds of Good Hope Foundation receives the amount you placed in trust after your death. It is also possible to establish a trust income to your surviving spouse. In this instance, the property would pass to Shepherds of Good Hope Foundation only after both spouses have died.

 

As charitable remainder trusts are irrevocable gifts, the donor is usually entitled to a donor receipt when the trust is created. The receipt amount is based on the present value of the remainder interest (usually 20% – 60% of the value of the property), determined by the fair market value of the assets, interest rates, donor’s age and the specifics or duration of the trust.

 

A financial advisor can help you determine how to establish a trust the best suits your wishes and circumstances. It is also advisable to consult your legal counsel in preparing a trust.

 

It is always a good idea to have a tax and/or accounting counsel review your trust annually.

 

Benefits

 

A charitable remainder trust offers these benefits:

 

It enables you to support causes which you believe in, while still providing for your heirs – You may want to ensure that you provide sufficiently for your spouse after your death. However, you may still be interested in supporting the efforts of Shepherds of Good Hope through its Foundation. You can establish a trust that will pay a reliable income to your spouse. Upon your spouse’s death, the capital in the trust will go the Shepherds of Good Hope Foundation as you wished.

 

A trust provides for expert financial management and steady income. This can alleviate concern while ensuring reliable funds for you, your surviving spouse or other heirs.

 

The trust property is removed from your estate. This reduces probate fees and ensures that your charitable gift cannot be challenged as it could in your Will.

 

The charity will not be taxed on any capital gain whether the assets are sold by the trustee or eventually distributed to the charity and then sold. In addition, as the donor, you are only responsible for the capital gain that is attributable to the remainder interest.

 

You can receive tax benefits for the gift during your lifetime – As charitable remainder trusts are irrevocable gifts, you may qualify for a charitable donation receipt at the time the trust is established. Commonly, a tax receipt is issued for the value of the residual interest that belongs to the charity.

 

A charitable remainder trust can provide flexibility when planning your estate, allowing you to meet your obligations to loved ones while enabling you to leave a legacy Shepherds of Good Hope Foundation.

 

Other Useful Links

Shirley’s Legacy

Frequently Asked Questions

Wills and Charitable Bequests

Planning your Estate and Leaving a Lasting Legacy

Leaving a Gift Through Life Insurance

Gifts of Property

Glossary of Terms


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