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| RETIREMENT CHARITABLE REMAINDER TRUST A special form of the Charitable Remainder Trust is the Charitable Remainder Unitrust (CRUT) used in a special way to provide retirement income to the donor. As a charitable remainder trust, the trust is designed to provide income to human beings and, at the final death of the human beings, the remainder goes to one or more charitable causes. The income stream is usually targeted at the donor ... or at the donor and spouse ... and is usually payable for the length of the combined lives. When the trust sells assets that have been transferred to it by the donor, it can do so with no capital gains tax obligation. Therefore, the entire asset can produce income for the income beneficiaries. There is no deduction for taxes. By designing the trust so that the trust pays income only when it produces income ... and by giving the trust "make-up" powers to make-up the income for the years when it paid none, the donor can have the trust designed to become a retirement plan. In order to make the CRUT a retirement plan, assets inside the trust will be invested in growth stocks during the pre-retirement years ... thus producing little or no income. Upon retirement, the growth assets can be sold, again without paying any capital gains tax, and invested in income-producing assets. The income percentage originally agreed upon can be paid to the donor for life. In addition, the donor can receive additional income if the trust earns it in order to "make-up" for the years in which income was foregone. Unlike other retirement plans, this one is not heavily regulated by the government ... and has been in the law in the same form since 1969. Hence, it is not as susceptible to change as are other retirement plans. Also, if the income recipient finds that, in a coming year, he will not need income from the trust, the trustee can temporarily, change the investment mix to, again, grow the trust corpus without payment of income. When income is needed again, the amount of income should be larger than before. Each Retirement Trust will name one or more charitable causes as the remainder beneficiary to benefit when the income beneficiaries interest is ended. If you want to name "The Foundation", just tell your attorney that we are to be the remainderman. |
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