Charitable Remainder Trust
A charitable remainder trust allows you to make a gift to Stephens while providing yourself with lifetime income. A charitable remainder trust can be established with a gift of $100,000 or more. Stephens works with its professional investment advisor to administer the trust. By law, the payout rate must be at least 5%, but may be higher depending on age.
Benefits of Charitable Remainder Trusts:
- Charitable remainder trusts can be tailored. Income can be paid out for a number of years (up to 20) or for life. The trust can be for the benefit of yourself or other designated beneficiaries like a spouse or child.
- If the trust is funded with appreciated assets like stock or real estate, any capital gains tax is avoided. The trust can sell the assets and pay out income to you without having to pay capital gains on the appreciation.
- When the trust is established, you receive an immediate charitable deduction for the present value of the remainder interest.
Example:
Sylvia and her husband, Tom, were farmers who wanted to retire and move closer to their children in a nearby city. They were worried about paying the capital gains taxes on the property because the farm had been in the family for generations. They solved their problem by deeding their farm to a tax-exempt charitable remainder trust. The trustee, Stephens College, sold the property, avoided all capital gains taxes and pays Sylvia and Tom income for the rest of their lives. In addition, the couple received a large tax deduction because the trust assets will come to the College when the trust ends.
