A charitable remainder trust is established for the life of the donor (also trustor or grantor) and/or for the life of any beneficiary(-ies). A charitable remainder trust is irrevocable; once established, it cannot be changed. If desired, the income period of the trust can be established for a specified period of time not to exceed 20 years. The 20-year maximum does not apply if the trust life is based on the life expectancy of the income beneficiary(-ies).

A charitable remainder trust is an attractive planning tool for the disposal of highly appreciated assets. While the assets revert to the charity rather than the heirs of the estate, the use of an irrevocable life insurance trust in conjunction with a charitable remainder trust could replace the assets' value for the heirs.

Susan: "I was one of the lucky ones. I went to a Boys & Girls Club as a child, and it saved my life. It was a very tough time for me and my family, but the Club staff were there when I needed a little help. Did it make a difference? Only in every aspect of my life!"

Fred: "We know how important Boys & Girls Clubs are to children when they have no place else to turn. We also know how difficult it is for the Clubs to maintain their facilities, keep their equipment up-to-date, and make sure that their volunteers are well trained."

Susan: "We benefited because Boys & Girls Clubs had been supported by others before us - but now we can give back. And what a joy it is to know that, although we no longer need the Club's help ourselves, we are making a difference for someone who does. It's awesome - we are changing lives!"

Fred: "That's why Susan and I decided to provide support to Boys & Girls Clubs of America by establishing a charitable remainder unitrust. Not only will the trust provide income to us throughout our lifetimes, but we have peace of mind knowing that the remainder will eventually benefit the young people served by Boys & Girls Clubs."

There are two different types of charitable remainder trusts.

An irrevocable charitable remainder unitrust is a popular way to achieve tax benefits as well as a fixed annual percentage on the value of the assets in the trust. The assets are revalued annually and the percentage rate established in the trust agreement determines the dollar amount of the unitrust interest. If the value of the principal in the unitrust declines, the value of the interest portion of the unitrust would decline as well. Conversely, the unitrust interest value would increase if the value of the trust assets increased.

A charitable remainder annuity trust is set up to pay a fixed rate of return based on the initial valuation at the time the property is placed in the trust. The trust assets are never revalued. If the assets of the trust go up in value, the income portion does not change.

Susan and Fred are content knowing that their gift will provide safe havens for future generations of youth who look to Boys & Girls Clubs for hope and guidance; they are making a difference now and providing for our future.

Click here to learn about testamentary trusts.