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Give...
a substantial gift to your
favorite Evangelical Lutheran Church in America (ELCA) ministry. God has entrusted you
with many gifts: talents, money, possessions. Your assets allow you to provide for those
you love, including ELCA ministries. Through a Charitable Remainder Trust (CRT), you
irrevocably gift assets to a trust, name a trustee - such as the ELCA - to manage the
trust's investment, and receive an annual payment for life or a term of years. The net
fair market value of the gifted assets is used to establish the initial trust value.
Receive...
an annual payment. You choose
who will receive annual payments for life or a term of years. Many donors make themselves
and their spouses beneficiaries for life. Others name their children as beneficiaries for
a term of years, up to 20 years, or for life. Others combine the above two options.
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Charitable Remainder Unitrust
A unitrust can make straight
payments of a fixed percent (minimum 5%) of the trust's annual net fair market value.
Other options may be chosen or required. For example, a payment may be the lesser of the
net income of the trust and the stated percent of the annual fair market value. The
straight unitrust payment fluctuates according to the annual net fair market value of the
trust.
Additions can be made to a
unitrust in subsequent years or upon death (See Qualified Retirement Plan
Rollovers below.)
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Charitable Remainder Annuity Trust
An annuity trust makes fixed
payments of a percent (minimum 5%) of the trust's initial fair market value. The trust's
change in market value will not impact the amount paid. The annual annuity trust payment
is paid first from trust income then, if necessary, from trust principal. IRS rules
prohibit additional contributions to an annuity trust.
Receive...
an immediate charitable
deduction. If you itemize, you can deduct the charitable gift portion of the CRT. The
deduction is the present value of the charitable remainder of the assets initially gifted.
The amount is determined by IRS actuarial tables at the time of the gift. If your
deduction exceeds what you may deduct in the year of your gift, the remaining portion can
be carried forward for five years.
Bypass...
capital gains taxes if you make
a gift of appreciated assets. Your appreciated assets are placed in your CRT. The trustee,
often the ELCA, sells the assets and invests the proceeds to meet the requirements of the
trust. Because the trust is considered a charitable entity, no capital gain is reported on
the sale of its assets. In order to take advantage of the bypass, you must place the
assets in the trust before they are sold.
Reduce or eliminate...
estate taxes and probate costs.
Your gift to a charitable remainder trust is irrevocable. Thus the assets you place in the
charitable remainder trust will be removed from your probated estate in most states. When
you, as donor, or your spouse are the only income beneficiaries, the trust is not taxed to
your estate. There may be estate consequences for other income beneficiaries that will be
partially offset by an estate tax charitable deduction. Please speak with a
Regional Gift Planner and your advisors.
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Testamentary
Unitrust
You can create a charitable
remainder trust through your will. It can provide lifetime income for one or more
survivors, plus leave a sizeable gift to your favorite ELCA ministry. The tax savings
generated by the charitable estate tax deduction can be significant. The trust can be
funded with any assets, including qualified retirement plan assets.
Qualified
Retirement Plan (QRP) Rollovers
Certain qualified retirement
plans (such as Individual Retirement Accounts (IRAs, 401(k), 403(b), Keogh) may be subject
to a large income tax at the death of the plan participant, especially if the assets were
set aside tax-free. You can continue your lifelong stewardship and provide your spouse or
others with a lifetime income by naming a charitable remainder unitrust as beneficiary of
your qualified plan. Being a tax exempt entity, plan assets rolled over to a charitable
remainder unitrust will not incur an income tax. Thus, the rollover provides an income to
whomever you choose and preserves a gift for your favorite ELCA ministry without incurring
income tax on the plan assets. Please speak with an Regional Gift
Planner and your advisors about any estate tax consequences of a QRP Rollover and
properly designating the charitable remainder unitrust as beneficiary.
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Charitable Beneficiaries
Any ELCA ministry may be chosen to receive the charitable
remainder of your gift. You may choose churchwide, a specific congregation, synod,
social ministry organization, college,
seminary, disaster relief,
Women of the ELCA, World Hunger Appeal,
Fund for Leaders in Mission, etc. Gifts of
certain amounts may establish an endowment to benefit certain ministries in perpetuity.
The examples
and information on this page are for illustrative and educational
purposes only and should not be considered tax or legal advice. Please
consult with your tax or legal advisor before proceeding with
your
estate plan.
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