Charitable Remainder Trust
What is it? An exchange of low-yielding, appreciated assets for higher income. Property (usually highly appreciated) is transferred to the charitable remainder trust. The trustee pays the income beneficiary (usually the donor and/or spouse) income for life or for a period of years up to 20 years. The payments must be equal to at least 5% of the trust's assets. After the trust terminates, the remaining assets are used to establish a fund or funds as instructed by the donor.
When is it used? When a donor wishes to make a substantial future gift and retain higher income on the gift assets during his or her lifetime.

When a donor wants to diversify assets and increase income from the assets without paying capital gains tax.

When a donor wants a current income tax deduction for a future gift and wishes to remove an appreciated asset from his or her estate. The higher the payment to the income beneficiary, the lower the charitable deduction when the trust is established.

When a donor wants either a variable annuity (as with a Charitable Remainder Unitrust) or a fixed annuity (as with a Charitable Remainder Annuity Trust).
How does it work? The trust document is prepared by the donor's professional advisor or The Minneapolis Foundation stipulating the terms of the trust. A trustee is chosen (it may be The Minneapolis Foundation, the donor, or a commercial firm). Assets are transferred to the trust. Trusts which are trusteed by The Minneapolis Foundation are invested in the Foundation's diversified investment portfolio called the Master Fund.

With a Charitable Remainder Unitrust, the amount the donor receives annually is determined on January 1st of the year based on the trust's assets and its payout rate. With a charitable remainder annuity trust, the annuity never varies during the life of the trust regardless of the trust's assets.

When the trust terminates, the assets left (the "remainder") are used to establish one or more funds at The Minneapolis Foundation. If a donor chooses to allocate at least one-half of the remainder for Community Action Funds, the Foundation reduces its customary trusteeship fee.
  We're happy to help you find the charitable giving or estate planning option that works best for your situation. We can work directly with you or through your professional advisor. Call us today at (612) 672-3874 or e-mail us at development@mplsfoundation.org.