Charitable Remainder Trusts
If you’ve built a substantial estate and want to receive steady income, a charitable remainder trust allows you or loved ones to receive annual payments for life or up to 20 years from the assets you contribute. When the trust term ends, whatever remains in the trust (the “charitable remainder”) goes to Big Bend Conservancy.
How It Works
This type of gift may offer you tax benefits and the option for income. There are two ways to receive payments and each has its own benefits:
A charitable remainder annuity trust (CRAT) pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in the value of trust investments.
A charitable remainder unitrust (CRUT) pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
Either of these options allows you to receive steady income for life or a set number of years, with the remaining assets later supporting Big Bend Conservancy’s mission.
Example
Charitable Remainder Annuity Trust (CRAT)
At 75, Gary and Joyce want to make a meaningful gift to Big Bend Conservancy while securing a fixed, guaranteed income for the rest of their retirement, which they can count on together.
They establish a Charitable Remainder Annuity Trust (CRAT) that provides annual payments to them for as long as either of them lives (their joint lifetime). The trust is funded with $1 million in highly appreciated assets and is structured to pay them a fixed amount of $50,000 per year, which is 5% of the initial trust value.
In the first year, and every year for the rest of their lives, Gary and Joyce are guaranteed to receive a fixed annual payment of $50,000 in income, regardless of how the trust investments perform. They also qualify for a substantial federal income tax charitable deduction of approximately $332,600* in the year they fund the trust, which saves them an estimated $106,432 in their 32% tax bracket.
Gary and Joyce are gratified knowing they've provided a secure and dependable source of income that will last for their joint lifetimes, with the remaining principal ultimately supporting the protection of Big Bend’s sweeping desert landscapes and remarkable wildlife.
*For Illustration Only: This content uses hypothetical figures and scenarios to demonstrate potential outcomes. Actual results will vary based on the IRS Section 7520 rate, market performance, and the ages of beneficiaries. It is not financial, legal, or tax advice. Consult a qualified professional for guidance specific to your situation.
Charitable Remainder Unitrust (CRUT)
At 60, Ray is focused on two key goals: providing a flexible income stream for his 30-year-old son, David, and giving back to his favorite place, Big Bend National Park. Ray works with Big Bend Conservancy to establish a Charitable Remainder Unitrust (CRUT), funding it with $1 million in highly appreciated assets that he no longer wants to manage. He structures the CRUT to pay his son an annual income equal to 5% of the trust's fair market value, revalued each year, for a set term of 20 years.
In the first year, David is guaranteed to receive $50,000 in income (5% of the initial $1 million). Over the next two decades, David's annual payment will fluctuate with the market performance of the trust assets. This structure provides him with an income stream that has the potential to grow, acting as a powerful financial boost during his critical working and family-building years (ages 30 to 50).
Ray qualifies for a substantial federal income tax charitable deduction of approximately $390,000* in the year he funds the trust. The gift of the income interest to David is covered by Ray's lifetime gift tax exclusion, making the transfer tax-efficient.
Ray is immensely gratified knowing he's secured a dynamic, 20-year income stream for his son, providing stability and growth when David needs it most, and that the remaining principal will eventually help preserve the vast desert landscapes and incredible wildlife of Big Bend National Park.
*For Illustration Only: This content uses hypothetical figures and scenarios to demonstrate potential outcomes. Actual results will vary based on the IRS Section 7520 rate, market performance, and the ages of beneficiaries. It is not financial, legal, or tax advice. Consult a qualified professional for guidance specific to your situation.
Interested in receiving more information?
Please email Loren Riemer, our Executive Director, at director@bigbendconservancy.org and express that you're interested in learning more about planned giving and you were looking at charitable remainder trusts.
We'd love to work with you!