1
A charitable remainder trust is a gift plan that allows the donor to retain an income from the gift for a fixed period of time.
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Trust: an agreement in which the assets of one party (the grantor or donor) are managed and distributed by another (the trustee).
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Recipients of the trust’s income are called beneficiaries.
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The “remainder man” receives the remainder of the trust after the specified period of time is over. Here the remainder man is Brown, a charity.
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Brown can serve as trustee and won’t charge a fee for the service.
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A trust agreement is signed and the donor turns over assets.
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The trustee makes payments to the beneficiaries so long as they are living.
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At the end of the trust, Brown will put the remainder to whatever use the donor originally intended.
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Two types of charitable remainder trust: annuity trusts (flat payment each year) and unitrusts (fluctuating payments based on value of the trust).
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For both types, the payment is a minimum of 5% of the trust’s assets.
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There is an income tax deduction even though the donor retains a stream of income.
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The trusts themselves are not taxed.
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Brown has 2 ways to invest in charitable remainder trusts.
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A: The "Legacy Option" (with State Street Global Advisors in Boston), a $50,00 minimum,
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B: or investing in Brown’s endowment, a $100,000 minimum.
