Charitable Remainder Annuity Trust

A charitable remainder annuity trust provides a fixed dollar amount for your lifetime, the lifetime of others, or a term of years.  At the death of the income beneficiary or a set term of years, the trust assets must be used for charitable purposes.

For example, you make a $250,000 gift to a charitable remainder annuity trust (CRAT) that will pay you $15,000 a year for life.  If the CRAT income is less than $15,000 a year, a portion of the prinicpal will make up the difference.  If the income is more than $15,000, the excess income is added to the principal.  At the termination of the trust, the remaining principal goes to charity.

The charitable remainder interest of the trust must equal or exceed 10% of the value of the assets funding the trust.  Generally, the older the income recipient, the larger the charitable remainder interest; the greater the annual payment, the smaller the charitable remainder interest.

For more information about trust services or any other service provided by New Covenant Trust Company, please contact Chip Walker at 800-528-4083, ext. 5912 or e-mail at cwalker@newcovenanttrust.com. Contact your tax advisor to determine how these trusts would actually affect your estate.