What is a trust and why would I need one?
A trust is a legal agreement that has three parties to it: Trustmaker - The person who creates the trust agreement, also commonly referred to as the Grantor, Trustor or Settlor. Trustee - The person or entity responsible for managing the property that the Trustmaker decides to title in the name of the trust. Beneficiary - The person or entity who is to receive the benefits of the property that is titled in the name of the trust.
Under this type of legal arrangement, the Trustmaker will transfer ownership of certain assets to the Trustee who will manage the assets for the benefit of the Beneficiary.
Two types of trusts that the Foundation utilizes frequently are Charitable Remainder Trusts and Revocable Trusts.
Charitable Remainder Trust
A Charitable Remainder Trust is a legal arrangement whereby a donor places assets (often appreciated assets) into trust, avoiding capital gains taxes on the front end. The Trustee administers the trust according to the donor’s instructions as written into the trust document, often providing income for the donor (or donor and spouse) for their joint lifetimes as well as a charitable deduction for income tax purposes for the donor. Charitable Remainder Trusts may be created for the donor’s benefit during the donor’s lifetime or as a testamentary trust within the donor’s Last Will and Testament for the benefit of the donor’s survivors.
There are two types of Charitable Remainder Trusts: (1) Charitable Remainder Unitrusts which pay income based upon a percentage of the trust assets each year or the net income of the trust, whichever is less, and (2) Charitable Remainder Annuity Trusts which pay a fixed annual income amount to the income recipients. After the term of the trust the charitable entity(s) – in the Foundation’s case those “charitable entities” are Baptist causes -- named by the donor in the trust document receive the remainder amount.
A Revocable Trust is an arrangement whereby you place assets with a Trustee who will manage those assets for you and pay income earned by the trust to you during your lifetime. Because the trust is revocable, you may take back part or all of the assets placed in the trust should you need or want to do so. Upon your death the trust documents instructs the Trustee as to what happens to the remaining assets of the trust. The Foundation will serve as Trustee of such trusts for those when, following your death, some Baptist cause will receive at least 10% of the remaining assets.
Is a Charitable Gift Annuity Right for you?
A Charitable Gift Annuity can be created when a donor gives assets to a qualified charitable entity in exchange for a contract that entitles the donor or donors to receive guaranteed quarterly or annual payments for his, her or their joint lifetime(s). Following the donor(s) lifetime whatever is left in the account becomes the property of the charitable entity. The Foundation offers Charitable Gift Annuities. Rates of return from Charitable Gift Annuities are particularly attractive when compared with typical rates for CDs and other financial products. Additionally, a charitable deduction for income tax purposes is available to the donor for the charity’s remainder interest.
The Foundation staff can work with you to see if a Trust or Charitable Gift Annuity should be a part of your Estate Plan. Call us at (800)552-4644, or contact us online, and let us discuss these with you.