Gift Planning

Charitable Remainder Trusts
(Complete gift description)

This is the most flexible gift plan for partnering with the Zoological Society of San Diego. This flexibility allows you to tailor an income plan that meets your and your family's financial planning needs thus unlocking your ability to make a significant gift to the Zoological Society of San Diego.

A charitable remainder trust (CRT) is an individually managed trust that pays income to its beneficiaries – you, your spouse, family members, or other individuals. Here's how a CRT works:

• The CRT pays income to the beneficiaries for their lifetimes, for a term of up to 20 years or for a combination of both.
• Beneficiaries receive a fixed dollar amount per year or a fixed percentage of the value of the trust's principal as which is revalued annually.
• Investment earnings in excess of the payment amount is reinvested to maintain principal and allow for growth.
• When your CRT terminates – at the death of the last beneficiary or at the end of the trust term – the remaining balance will be available to the Zoological Society of San Diego for the use you designated when you created the trust.

What are the tax advantages of a CRT?

• If you fund a CRT with appreciated securities or property, no up-front capital gains tax is payable. You can contribute appreciated but low-yielding assets and put the entire value of your gift to work generating higher income for you.
• Similarly, no capital gains tax is applied to the growth of a CRT's principal.
• Besides avoiding capital gains tax, you also receive a charitable deduction when you create a CRT. Your deduction will generally be based on the full fair market value of the assets you contribute, reduced by the present value of the assets you retained. We can generate this deduction amount for your planning purposes.

How do you create a charitable remainder trust?

Setting up a charitable remainder trust is not particularly difficult, but you should be advised by an attorney with expertise in the area of charitable trusts and estate planning.

Planning tip – grow your gift and your income

The CRT is designed to make payments that fit your needs and goals. We offer an alternative version designed to hold a temporarily illiquid asset or a portfolio of growth securities for a period of time, while it pays the beneficiaries the lesser of the CRT amount or the CRT's actual net income. Called a net-income unitrust, this option is especially useful to donors who want to make a gift and secure a tax deduction now but who don't need income back immediately.

A net-income unitrust can continue in that format for its entire term, or it can make up the accrued difference between actual income payments and the unitrust amount in years when it earns surplus income. An attractive option is the flip unitrust, which changes from an income-only payout to a fixed-percentage distribution when a pre-arranged event occurs – such as the beneficiary turning 65 or the property in the unitrust being sold.

A net-income unitrust can change its investments to income instruments with no capital gains liability. Therefore, it is an attractive tool for younger donors to build a supplementary retirement or tuition fund that will grow tax-free, then distribute income when they and their family need it most.

We can assist you and your advisers in considering the alternative of a net-income unitrust. Click here to see additional planning tips.

For more information

Email us, complete the personal illustration form, or call us at (619) 744-3352 so that we can assist you through every step of the process.