Charitable Reminder Trust

Planning for the Future - for You and Your Community

A charitable remainder trust allows you to set aside assets for the ultimate benefit of your community, yet allows you to receive income from those gifted assets for the remainder of your life.

You transfer assets into a charitable trust, and the trust pays you or a beneficiary you designate regular income payments. Upon the beneficiary's death or after a defined period of years, the remaining assets in the trust transfer to the Grand Island Community Foundation.

You may choose to receive a fixed income or one that changes with market conditions - income from the charitable remainder trust you establish may add up to more than interest and dividends you earned from holding the assets. You can use it to supplement your own lifestyle or that of someone other than yourself: a sibling, a dependent parent, a friend, or a former employee. You can start receiving annuity payments immediately, or defer them to increase your charitable income tax deduction.

A portion of the income may be a tax-free return of principal, while some is taxed as ordinary income or capital gains. The amount of annuity paid and the tax deduction received depend on the age of the recipient and the current annuity rate (as established by the Internal Revenue Service).

You can pick one of these options for your charitable remainder trust:

  • Annuity trust pays you a fixed dollar amount.
  • Standard unitrust pays you an amount equal to a fixed percentage of the net fair market of the trust and is recalculated annually.
  • Net income unitrust pays you the lesser of the fixed percentage specified by the trust agreement or actual trust income. Some net income unitrusts allow you to make up deficiencies in past years.
  • Flip unitrust is a net income unitrust that converts to a standard unitrust upon a triggering event, such as the sale of an asset used to fund the trust.

Example Story

A Gift that Pays

Kirk was retired and in his late 70s. The stocks he owned had high market values, but they paid limited dividends. In addition to increasing his personal income, Kirk was interested in giving to the community in which he had lived his entire life, so he decided to transfer the securities to a charitable remainder trust that eventually would create a fund with the Grand Island Community Foundation. The income he receives from the trust is more than what he was collecting in annual dividends - by thousands of dollars. If he had sold the stocks, he would have paid a fortune in capital gains tax. Kirk also receives an immediate charitable deduction and pays less tax on the trust distributions. Plus, he knows that when he passes, he's done something good. In time, Kirk's gift will create the Kirk Doe Family Unrestricted Fund to address ever-changing community needs.

Learn More

There is so much more we'd like you to know. For more information and ideas on ways to integrate charitable giving with your financial plan, ask your financial advisor or contact the Grand Island Community Foundation at (308) 381-7767 or online. We will be happy to work with you and/or your advisor to determine the most effective ways to accomplish your charitable goals.