Charitable Remainder Annuity Trust (CRAT)
The charitable remainder annuity trust is a trust in which you place assets that will pay you a fixed annual income for life that is equal to at least 5 percent of the initial fair market value of the trust assets.
How It Works
- You transfer cash, securities, or other appreciated property into a trust.
- The trust makes fixed annual payments to you or to anyone you name.
- When the trust ends, the remainder passes to Tabernacle Baptist Church.
Benefits
- You receive an income tax deduction for a portion of your contribution to the trust.
- You pay no immediate capital gains tax on any appreciated assets you donate.
- You or your designated income beneficiaries receive stable, predictable income for life or a term of years.
- You have the satisfaction of making a significant gift that benefits you now and Tabernacle later.
Consult Your Financial Advisor
When considering a Charitable Remainder Annuity Trust, consult your financial and estate planning advisors. They will help you determine if a CRAT is right for you.
Click the button below to calculate how
a Charitable Remainder Annuity Trust can benefit you.
A Case Study
Mary, aged 75, owns several stocks with a market value of $100,000, but they pay dividends of only $2,000 a year, or 2 percent of market value. She decides to transfer these securities to a charitable remainder annuity trust that will pay her 7 percent, or $7,000 a year, increasing her gross income by $5,000.
If Mary sold her stocks instead, she would pay an enormous tax on her capital gain. Their cost basis is $30,000, compared to the current market value of $100,000, resulting in a gain of $70,000. At a federal capital gains tax rate of 15 percent, the tax would be $10,500. This would leave her with only $89,500 to reinvest, so she would have to find stocks that pay a dividend of more than 8 percent to receive the same $7,000 her trust can pay her.
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If you would like more information about planned giving at Tabernacle, contact Dr. Bruce Minett - Executive Associate Pastor. He will be happy to speak with you.
Disclosure:
The information in the planned giving section of Tabernacle's web site is not designed to act as legal or financial advice. While Tabernacle Baptist Church is glad to provide general information, this information should be reviewed by professional, financial advisors prior to any action.
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