While less common than Charitable Gift Annuities, Bequests and Beneficiary Designations, Charitable Remainder Trusts (CRT) and Charitable Lead Trusts (CLT) offer donors a wide range of options.
A CLT or CRT is a legal entity that you establish with the help of an attorney and others (usually a bank). You place assets in the trust. The trust uses the assets to provide income to an income beneficiary for a specified term. At the end of the term, the trust transfers the remaining assets to the remainder beneficiary.
Both CLTs and CRTs are irrevocable, which means once assets are placed in the trust they cannot be taken back.
CLTs and CRTs can be precisely tailored to meet the needs of donors with more complex and larger estates. Because they involve attorneys and financial institutions, there is expense to you associated with setting them up.
CHARITABLE REMAINDER TRUST
A CRT provides income to one or more non-charitable beneficiaries (such as the donor and/or their family) for a term (usually the life of one or more individuals), then transfers the remainder of the assest to one or more charities.
A CRT functions similarly to a Charitable Gift Annuity (CGA) in that the assets from a gift now produce lifelong income. The difference is that with a CGA, the charity receives the gift and is contractually obligated to pay the beneficiary. With a CRT, the trust receives the gift and pays the beneficiaries.
CHARITABLE LEAD TRUST
A CLT provides income to one or more charities for a term such as a set number of years or the life of one or more individuals. At the end of the term, the remainder of the assets are transferred to non-charitable beneficiaries (usually family members).
UNITRUST VERSUS ANNUITY TRUST
Both CLT and CRT can be created as either an Annuity trust or a Unitrust.
With an Annuity trust, the income payments are a fixed amount dictated in the terms of the trust. Assets cannot be added to the trust once it is established.
With a Unitrust, the income payments are a percentage of the trust's assets, which will fluctuate with the market. Also, assets can be added to the trust.
HOW TO PROCEED WITH A CLT OR CRT
If you are considering one of these gift instruments, we would love to discuss the way that your gift will be used, how to structure the gift for maximum advantage to you and your heirs, and how you would like to be recognized.
Please contact Mark Cotleur, senior vice president of fund development, at 216-696-8401 or mcotleur@sistersofcharityhealth.org.