Fountain Professional Group, Inc.

CHARITABLE REMAINDER TRUST

How We Can Help You?

Many families have discovered the tax and income benefits of the Charitable Remainder Trust (CRT). Even though this program has been in the tax code since 1969, it is becoming increasingly valuable to donors because inflation has pushed asset values substantially higher over the years. We can help you increase your income and save taxes at the same time.

What are the benefits of a CRT?

Turns highly appreciated assets (like stocks & real estate) into a lifetime income
Avoids capital gains tax
Reduces income tax
Avoids probate and estate taxes
Benefits charity

How does it work?

Establish your irrevocable trust
Name yourself as income beneficiary
Name your Charity
Choose your interest rate
Transfer your increased value asset to the trust
Have the trustee sell the asset inside the trust (avoiding the capital gains tax) and reinvest the assets in income producing assets
For the rest of your life, the trust pays income to you
When you die, the trust balance will go to your named Charity

Who can receive income from your trust?

You can name anyone in your trust to receive income -- you, your spouse your children, other relatives. Once you select the income beneficiary though you cannot change it.

Do I still have control?

Yes, you may be your own trustee of your trust. This is the person who makes the decisions on where the money will be invested and who will keep all the records for the trust. You can reserve the right to change the trustee as well.

Would it be better to sell the asset myself and reinvest the proceeds?

In most cases, with appreciated assets, you will pay more in taxes and receive less income by selling the asset outside of a CRT. The following example is for a 65 year old donor in the 28% Tax Bracket, with an asset valued at $500,000 and a cost basis of $100,000.

SOLD without CRT	Item	SOLD within CRT
$500,000	Asset Valuation	$500,000
($75,000)	Capital Gains Tax 15%	$0
$425,000	Balance to Reinvest 7%	$500,000
$21,420	7% Annual Income (shown after-tax 28%)	$25,200
$428,000	Total Income for Assumed Life Expectancy of 20 Years	$504,000
$0	Income Tax Savings (ITS) (from remainder gift to charity)	$54,426
$0	Growth of ITS for 20 years: 7% After 28% Tax 5.04%	$141,512
($191,250)	Estate Tax (assumed at 45%)	$0
$661,750	Cumulative Total to Family	$649,512
$0	Gift to Charity	$500,000
$661,750	Total Distribution	$1,149,512

What are my income choices?

VARIABLE
The interest rate you choose is applied to the value of the trust. The value of the trust may vary depending upon the choice of investments inside the trust from year to year.

FIXED
A set annuity payment can be paid to you regardless of the types of assets in the trust.

How is the income tax deduction determined?

There are several variables, the value of the assets, your age and government interest factor, that make up the formula for determining the charitable deduction. The older you are, the higher the charitable deduction. THIS IS A WIN, WIN, situation for you, your heirs and Charity.

Are there any ongoing costs once my trust is established?

There are certain IRS requirements to maintain the qualified tax status of the Charitable Remainder Trust. To be in compliance there is record keeping and tax return filings required annually. The annual costs for this administration is paid out of the CRT assets. The cost varies with each CRT.

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