Charitable Trusts
Charitable Remainder Trusts (CRTs) pay income to an individual and, at a later date, pay the principal to a designated nonprofit. CRTs are excellent vehicles for an individual who plans on leaving a portion of their estate to a nonprofit, but needs income from their investment portfolio today. Charitable Lead Trusts (CLTs) pay an annual amount to a designated nonprofit and transfer the principal back to the grantor or another person at some future date. These trusts can be structured to pull future tax deductions into the present or to significantly reduce gift and estate taxes on transfers of assets to heirs.
Charitable Reminder Trust Advantages
CRTs allow you to deposit highly appreciated assets (often common stock, real estate or privately held business interests) and defer paying capital gains tax when they are sold. This allows you to tax efficiently exchange non-income producing assets for a diversified portfolio. You also receive an income tax deduction for the present value of your eventual gift to a nonprofit.
CRTs come in various forms with each having a different method of determining income payments. Ensemble consults with you to determine the best strategy to meet both current and future income needs by creating either a fixed income payment or an income stream that has the potential to grow over time.
Charitable Lead Trust Advantages
A CLT gives you two options to reduce your taxes. If your objective is an income tax deduction, the CLT can be structured so that annual payments are made to a nonprofit and the principal is returned to you at some point in the future. You can take an income tax deduction for the present value of the annual gifts in the year the trust is created.
Alternatively, the trust can name an heir as the beneficiary of the principal interest and be structured to enable a gift and estate tax deduction. If you forego an income tax deduction, you can use the present value of the annual payments to reduce the amount of the gift. In this way, you can make large transfers of assets to your heirs with little or no tax implications.
Charitable Trust Services
We offer comprehensive services for charitable trusts: