Avoid Capital Gains Tax and Receive Income for Life
Some planned gifts are designed to provide significant benefits for both the charity and the donor. A charitable remainder trust (CRT) is a great example of this. That’s because it enables you to:
- Avoid or defer paying capital gains taxes on the sale of appreciated assets;
- Convert highly appreciated, underperforming assets into an income stream;
- Diversify the portfolio of assets upon which you depend on for income;
- Enjoy an income tax deduction now;
- Reduce your estate taxes; and
- Provide significant financial support for Children's Home Society of Washington’s programs.
Here’s how it works:
Transfer cash or the highly appreciated asset(s) to a tax-exempt trust. You may serve as trustee or select a corporate trustee, such as a bank, or Children's Home Society of Washington to serve in that role.
The trustee sells the asset but does not have to pay capital gains taxes on the sale, because the trust is tax exempt.
The trustee reinvests the proceeds of the sale in assets that produce income.
You and/or your beneficiaries receive income or a payout from the trust’s assets for the rest of your life or the term that you choose. The payout can be either a fixed percentage of the trust’s assets valued annually (unitrust) or a fixed dollar amount (annuity trust).
You will be entitled to receive a significant income tax charitable deduction the year you transfer the asset into the trust.
At the end of your life or the chosen trust term, the assets that remain in the trust are transferred to a charity of your choice, such as Children’s Home Society of Washington.
Please call 206-388-5870 for a no-obligation illustration of your tax and financial benefits from this gift and to explore if this option is right for you. This is not professional legal or tax advice. Please consult your professional adviser about the consequences of this gift to your situation.