Establishing a Trust

Charitable Remainder Trust (during lifetime) CRT: Donor establishes trust and transfers stock worth $100,000 to trust, retaining five percent per year income stream for life of donor (and/or other beneficiary), trust assets pass to charitable organization. Benefits: Donor (and/or another beneficiary) receives income stream; if transferred stock was low yielding, income stream may exceed the amount of dividend income that donor had been receiving (either immediately or after retirement); avoidance of potential capital gains tax; donor could retain control over trust investments as trustee or, if donor would prefer, someone else could be the trustee and relieve the donor of investment responsibilities; income tax deduction calculated on actuarial basis; with certain kinds of trusts (unitrusts), donor can make additional contributions to the trust.

 Charitable Lead Trust (during lifetime) CLT: Donor establishes trust, transfers stock worth $100,000 to trust, and directs that trust is to pay charitable organization $8,000 annually for 15 years; at termination of trust, assets to be distributed to donor's children. Benefits: Allows property to be transferred eventually to family beneficiaries at a low transfer tax cost.