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Charitable Trust Details

Charitable Trust Details

autumncropped_DSC3912Charitable Remainder Unitrust
A trust providing for a variable rate of income is a Charitable Remainder Unitrust. A Charitable Remainder Unitrust provides income to you or a designated beneficiary based on a payout rate (not less than 5%) of the fair market value of the trust assets as determined annually.

Advantages: Creating a unitrust entitles you to a charitable deduction for the value of General Seminary's remainder interest. Transfers are exempt from capital-gains tax, and the same limitations and carry-over provisions apply. You receive a guaranteed income for life, and the Seminary receives in your name a significant gift.

Charitable Remainder Annuity Trust
A trust providing for a fixed rate of income is a Charitable Remainder Annuity Trust. If you are concerned primarily with receiving (or having your designated beneficiary receive) a specified amount during the term of the trust, you may prefer to establish an annuity trust. The required annual income distribution is predetermined by the donor at a minimum of 5% of the fair market value of the trust assets as of the date the assets are transferred to the trust. The same tax deduction, limitation and holdover regulations apply to the annuity trust as in the case of a unitrust.

Advantages: Creating an annuity trust entitles you to a charitable deduction for the value of General Seminary's remainder interest. Transfers are exempt from capital gains tax and the same limitations and carry-over provisions apply. You receive a predetermined guaranteed income for life, and the Seminary receives in your name a significant gift.

Charitable Lead Trust
A Charitable Lead Trust is the reverse of a Charitable Remainder Annuity Trust or Unitrust. In the case of the latter, the donor retains a life interest in the income from the trust's principal, which is transferred to General Seminary at the end of its term. With a Charitable Lead Trust the opposite is true. The donor transfers income from the corpus (the "lead" interest) to the Seminary, but the trust principal is distributed to non-charitable beneficiaries, usually children or grandchildren (or to trusts for their benefit) at the end of the trust's term.

Advantages: Although a Charitable Lead Trust may take a number of forms, they all offer similar tax benefits. The donor must have an income producing asset, the income from which is donated to the Seminary for a specified period of time. The asset is then transferred to non-charitable beneficiaries. In estate planning, a Charitable Lead Trust is an excellent method for minimizing gift or estate transfer tax incurred on the taxpayer's transfer of assets to family members or other individuals.

Example: A donor establishes a 20-year Charitable Lead Annuity Trust with $1,000,000. The trust agreement specifies that General Seminary shall receive 7% of the original principal's value, or $70,000 in income annually, for purposes stated in the agreement. At the end of twenty years, the donor's heir receives the trust principal. The gift tax on this transfer is calculated on what the IRS estimates the value of the trust's principal will be at the end of the term-$222,540 in this case, according to current Treasury tables. The beneficiary is liable for gift tax only on this remainder value. The balance of the principal passes to the beneficiary tax-free. (The liability on the remainder value may be offset by any estate-tax and gift-tax unified credits available to the donor.)

Life Estate Contract
It is possible for you to make a gift of your personal residence to General Seminary, reserving the right to live in the house as long as you or your spouse or partner live. If the gift is made on an irrevocable basis, you qualify for an immediate income-tax deduction for the present value of the Seminary's remainder interest in the property.

Advantages: There are several benefits in making a gift via a Life Estate Contract. First, you will receive a substantial charitable contribution deduction based on the value of the remainder interest without an expenditure of cash or reduction in income. Second, you retain the right to continue to live in the residence. Third, you have the satisfaction of knowing that General Seminary will receive a substantial future benefit from your gift.

Wealth Replacement Trust
A Wealth Replacement Trust is a vehicle for protecting the interests of your heirs while still providing for a significant gift to General Seminary. Under this plan you as a donor give to the Seminary property or assets, either outright or through one of the other deferred giving vehicles detailed in these pages. Using the tax savings generated by the gift, you then purchase a life insurance policy with your heirs as beneficiary.

Advantages: The Wealth Replacement Trust restores the assets of your estate which have been used to make a charitable gift, and can be designed to provide your heirs with their bequests free of estate taxes.

THE GENERAL THEOLOGICAL SEMINARY
440 West 21st Street, New York City, NY 10011   |   tel (212) 243-5150  fax (212) 727-3907

The General Seminary of the Protestant Episcopal Church is a tax exempt organization under section 501(c)(3) of the Internal Revenue Code.

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