By helping you align your financial needs with your stewardship goals, New Covenant Trust Company works with you in support of your Presbyterian values. A charitable trust professionally managed and administered by New Covenant Trust Company will provide long-term income as well as a future gift to a mission or ministry of your choice. Charitable Trusts come in many varieties. We will work with you and your tax professional to determine the best trust vehicle for your family and philanthropic needs.
A Charitable Remainder Trust is an irrevocable trust that provides payments for your lifetime, the lifetimes of others, or a set term of years. These payments can be made to you or other income recipients. After the lifetime of the payment recipient(s) or the expiration of the term of years, the remaining trust assets become available for the work of your church or designated ministry according to your wishes.
Reasons You May Want to Consider a Charitable Remainder Trust
Desire to support the work of a church or ministry
Increase income for yourself or others
Create charitable contribution deduction
Capture long-term capital gain without immediate taxation
Diversify portfolio assets
Reduce estate size and potential tax
A Charitable Lead Trust(CLT) exists for a term of years or a lifetime, during which time the trust makes payments to a charitable beneficiary you name. When the charitable term ends, trust assets are either returned to you or released to other persons you name. Transferring assets to a Charitable Lead Trust can remove them from your estate and pass them to heirs with little or no tax liability. A gift tax discount arises because of the charitable interest preceding your heir's interest.
Example: You make a $500,000 gift to a twenty-five year CLT paying $30,000 per year to charity before passing to your children. The gift to your children is valued at only a fraction of $500,000.
A CLT pays either a fixed amount to charity, or a fixed percentage of the trust's value determined annually. By structuring a CLT to return assets to you, you may obtain an income tax deduction for the charitable interest. In the example above, if the assets revert to you after twenty-five years, the charitable interest is a large portion of the $500,000.
For more information about trust services or any other service provided by New Covenant Trust Company, please contact us at 800-858-6127 or by email. Contact your tax advisor to determine how these trusts would actually affect your estate.