Help ensure the future of the Jewish community. Receive income for life or transfer property to your children or grandchildren in a tax-advantaged manner.

There are several different types of trusts and each has specific benefits to the donor and charity. In general, assets are deposited into a trust. The trust pays a stream of income either to the donor/designee or to the charity. At the end of the trust, the assets that remain will go either to charity or revert to the donor's family. The amount of the income stream is either a set amount per year or a percentage of the value of the assets.

Remainder Trusts. A Remainder Trust means that the income stream is given to the donor or someone whom the donor designates. At the end of the trust term, the remaining assets go to the charitable organization the donor has designated.

Lead Trusts. A Lead Trust means that during the life of the trust, the income stream is given to the charitable organization. At the end of the trust term, the assets that remain may revert back to the donor's heirs. This can be an excellent way to preserve assets while reducing estate and inheritance taxes.

Within these two types of trusts, there is another determination - the amount of the income stream.

Annuity Trust. An Annuity Trust provides a fixed income stream for the life of the trust. 

Unitrust. A Unitrust provides a variable payment, based upon a fixed percentage of the value of the trust.

More about specific trusts

Charitable Remainder Annuity Trust (CRAT). The CRAT provides a fixed income stream at a guaranteed level based on the value of the trust's assets at the time it is established. The income from an annuity trust is in many cases greater than that available to you in the commercial marketplace, and can be used to:

• maintain or enhance current lifestyle
• transfer income to family members or heirs
• provide additional cash support
• purchase wealth replacement life insurance to provide tax-free inheritance to heirs
• a combination of the above

As with any other charitable gift, you will receive a charitable income tax deduction in the year you establish your CRAT. At the end of the term of the trust, the assets revert to the Foundation and are used for purposes you specified.

Establishing a Charitable Remainder Annuity Trust allows the donor to assure an income for life and also see to it that the community will benefit in perpetuity—the remainder goes to a fund at the Tidewater Jewish Foundation in the donor's name, and the donor receives a healthy tax deduction that can be taken immediately and/or carried forward for five subsequent years based on IRS limitations. The donor receives a fixed annual income for life, as does a named surviving spouse or other person named in the trust document. Estate taxes will be significantly reduced and a permanent fund will be created in the donor's name.

Chartiable Remainder Unitrust (CRUT). The CRUT provides a variable income based on investment performance. Unitrust income is calculated as a fixed percentage of the value of the trust, determined each January 1. If trust investment performance exceeds annual income payments to you, the trust's value should increase each year. So, too, should your income. The unitrust is a perfect vehicle for the risk-tolerant investor or for those who desire an inflation hedge. You may make multiple or serial contributions to a Unitrust.

Charitable Lead Trust (CLAT). The CLAT is a trust that pays income to an endowment fund for a certain number of years. Then, the trust assets are returned to you or anyone you designate (such as your children or grandchildren). A Charitable Lead Annutiy Trust can serve as a creative estate planning tool to minimize estate taxes on assets you intend to leave to your children or grandchildren, particularly when assets are expected to appreciate. Major benefits of a charitable lead trust include:

• Reduction in estate tax on assets left to children and grandchildren;
• Allows you to make a substantial charitable gift over a period of years.

If you want to leave something to children and grandchildren, while minimizing the percentage taken by estate and generation-skipping transfer taxes, setting up a CLAT makes sense. A part of the estate is donated to the trust immediately, and the income goes to a fund at the Foundation, directly to a specific charity, or for a restricted purpose for a designated number of years.

The trust will reduce estate taxes and prevent property from being taxed to your children until the underlying asset(s) is sold. When your children's children reach maturity, the trust is terminated and the assets go for their benefit. The community benefits during all those in-between years, and your grandchildren receive much more than they would have otherwise.

Like the Remainder Trusts, Lead Trusts can be established as either a Charitable Lead Annuity Trust (CLAT), which pays a fixed income stream to the charity, or as a Charitable Lead Unitrust (CLUT), which pays a variable income stream to the charity.

For more information, please contact Robert C. Pozen, Director of Gift Planning, at 965-6111 or via email.