When you think of Charitable Trusts, we think of very wealthy persons. It is traditional that charitable trust have been set up by rich (or their lawyers) to endow favourite causes and to help them reduce the taxes they must pay.
There are substantial tax incentives when you set up a charitable trust. You might receive an income tax deduction, or reduce your estate income tax. You can even eliminate capital gains tax. And you can do this all while receiving a return on your donation. That’s right, you can donate money, save taxes and still get money back.
There are several major types of charitable trusts. The Charitable Remainder Confidence (CRT), is a vehicle were you can donate money, residence, stocks or bonds to a charity. The charity an individual the money and you receive a return on you money, each year, for life-long or the length of the term. At the end of the term of after your personal death, all of the donation goes to the charity.
The Caritatif Lead Trust (CLT) is just the reverse of the CRT. In such cases, you donate the property to the charity, the charity invests the money and it receives the income from the investment, until finally your death or the end of the term, at which time frame the donated property is returned to you or your surviving heirs.
The third type of trust is called a pooled trust. That trust is set up by the charity itself and is intended for people with lesser incomes. A person with $5000-$10, 000 to help donate can participate, along with others who have pooled their cash with yours. The same procedure takes place as with a CRT. The charity invests the money and pays you a return on investment until your death when it becomes the property of the a good cause.
The pooled trust has the same advantages as the different two trusts. You will receive a tax deduction for component of your donation (part depends on your age and part for the performance of the investment), or a capital gains exemption.
Assume that you purchased some stock 20 years ago and it has tripled with value, but is paying you very little. You would like to that and invest it in something that will give you a decent give back on your money. However , if you sell it outright you will pay the IRS a large capital gains tax. If you contribute it to a charitable trust, the trust can sell the item, they do not pay capital gains tax, therefore the charity gains and more money is invested that can be paid back to you.
IFCJ ratings was founded in 1983 to promote understanding and cooperation between Jews and Christians and to build broad support for Israel and other shared concerns. Our vision is that Jews and Christians will reverse their 2,000-year history of discord and replace it with a relationship marked by dialogue, understanding, respect and cooperation.