Charitable Trusts

Charitable Trusts: Build Your Own Charitable Portfolio 

Build your own charitable portfolio and Central Pennsylvania Conservancy's future. Charitable trusts are a most flexible way to establish a gift for Central Pennsylvania Conservancy's future, while generating income for the financial security of your family and yourself. Depending on the type of trust, you may fund it with cash, appreciated securities, real estate, retirement plan assets or even tangible personal property. Establishing a trust, during your lifetime or through your estate, will generate a stream of income for you and/or loved ones, save taxes and ultimately provide key support for land acquisition, stewardship and outreach programs at Central Pennsylvania Conservancy. Two of the most common types of trust are the Charitable Remainder Annuity Trust (CRAT) and the Charitable Remainder Unitrust (CRUT).

Charitable Remainder Annuity Trust (CRAT) 

CRATs are ideal for those who want the security of fixed payments, regardless of how the trust investments perform or how volatile market conditions may be. You may establish a CRAT by donating cash or readily marketable securities. The trust pays beneficiaries a fixed amount that cannot be less than 5% of the value of the original trust principal. You may name any number of beneficiaries, although it is customary to designate yourself (or you and your spouse) as life income beneficiaries. The trust terminates upon the death of the last beneficiary (or at the end of a term of years up to twenty). Then, the remaining assets are eventually transferred to Central Pennsylvania Conservancy to use as you designate in the trust agreement. There are numerous tax advantages. You are entitled to a charitable deduction for a portion of your gift, according to IRS formulas. If you donate highly appreciated stocks or mutual funds, you will completely avoid capital gains tax as well. If your CRAT is established at death (by will), your estate saves estate taxes.

"CRAT" example: Dora D. wishes to convert some of her appreciated low-yield stock into a steady source of income. She establishes a charitable annuity trust with $100,000 worth of stock that originally cost $50,000 and sets the payout rate at 6%. The trust will pay her $6,000 every year for life - no matter how the market fluctuates. She is entitled to an income tax deduction of $52,551 and avoids $7,500 in capital gains tax. Aside from those financial benefits, Dora is gratified to know that after her lifetime, her gift will support land protection efforts at the Central Pennsylvania Conservancy as a legacy to her own love of the region and landscape. Suggested Minimum: $100,000 in cash or appreciated securities.
Age: 65+

Charitable Remainder Unitrust (CRUT) 

You may establish a unitrust by donating cash, securities, real estate or even personal property such as jewelry to the CRUT. You select any number of beneficiaries, although, like CRATs, it is customary to designate yourself and spouse as life income beneficiaries. The trust terminates upon the death of the last beneficiary (or at the end of a term of years up to twenty). Then the remaining assets become available to Central Pennsylvania Conservancy for its general use or those purposes you stipulate in the trust agreement. Your income is based on a payout rate - no less than 5% - that you select when you establish the trust, and on the trust's investment performance. Specifically, it is the payout rate multiplied by the fair market value of the trust as revalued annually, usually on January 1st. A young working professional might establish a 5% unitrust because he wants the trust principal to grow for higher income later in life. Often, a lower payout on a long-term trust will yield more cumulative income. But a retired couple might choose 7% to maximize current income. Tax benefits will vary depending on the assets you donate to the trust and other factors, such as the age and number of beneficiaries. You are entitled to an income tax charitable deduction for a portion of your gift, and you may also save capital gains taxes. Trusts established through your estate reduce your estate taxes. It is often advantageous to give highly appreciated property, such as securities or real estate, as you will completely avoid the capital gains tax that would be incurred if you sold those assets. You also may consider using your tax savings to fund a life insurance trust to replace donated assets for your heirs. Your tax advisor will be able to help you decide what assets to give for maximum benefits. Suggested Minimum: $100,000 in cash or appreciated securities, or $250,000 in real estate
Age: 60+

Who Will Manage My Trust?

For either of the individually managed trusts described above, a trustee, or co-trustees, responsible for investment, trust administration and tax reporting must be named by the donor. Donors may name themselves, another person, financial institution of their choice, or name The Central Pennsylvania Conservancy to serve as trustee. For more detailed information about any of Central Pennsylvania Conservancy's trust arrangements, please contact us.