What is a trust and why would I need one?
A trust is a legal agreement involving three parties:
Grantor: Also known as the Trustor or Settlor, this is the person who creates the trust agreement.
Trustee – The person or entity (like the Foundation) responsible for managing the property that the Grantor decides to place in the trust.
Beneficiary – The person or entity who is to receive the benefits of the trust
Through a trust, the Grantor transfers ownership of assets to a Trustee who will manage the assets for the benefit of the Beneficiary.
The Foundation frequently utilizes Charitable Remainder Trusts and Revocable Trusts to meet the income and charitable goals of its clients.
Charitable Remainder Trust
A Charitable Remainder Trust (CRT) is a strategy in which a Donor gives assets—often appreciated assets–to a Trustee to manage according to a trust document. Typically, the Donor (and sometimes other people) receives income from the trust during lifetime, but at his or her death, any property remaining in the trust is paid to a charity of the Donor’s choosing. In the case of the Foundation, these charities are Baptist causes. The Donor may potentially receive a tax deduction for establishing this type of trust. Additionally, a CRT may be established during the Donor’s lifetime or at his or her death though a Last Will and Testament.
The type of CRT is distinguished according to how the income is paid to the Donor. A Charitable Remainder Unitrusts (CRUT) pays income based upon a percentage of the trust assets each year or the net income of the trust, whichever is less, while Charitable Remainder Annuity Trusts (CRAT) pays a fixed annual income amount to the income recipients.
In this arrangement, a Donor places assets with a Trustee who will manage those assets for him or her and pay income earned by the trust to the donor during his or her lifetime. Because the Donor is able to terminate this type of trust at any time, it is called revocable. Upon the Donor’s death, the Trustee distributes the assets according to the terms of the trust agreement. The Foundation will serve as Trustee of these types of trusts as long as a Baptist cause will receive at least 10% of the assets placed in the trust.
Is a Charitable Gift Annuity Right for you?
A Charitable Gift Annuity is created when a Donor gives assets to a qualified charitable entity in exchange for a contract that entitles the donor or donors to receive guaranteed payments for his, her or joint lifetime(s). The payments are based on the Donor’s life expectancy. Following the donor(s) lifetime, funds left in the account becomes the property of the charitable entity. The donor may also be entitled to a charitable deduction for establishing this type of arrangement.