Charitable Remainder Trusts (CRT’s)
Charitable remainder trusts allow you to place almost any asset into a trust, while providing income to yourself and others. The income can continue for the lives of the beneficiaries you designate, for a fixed period of time (not to exceed 20 years), or for a combination of both. When the terms of the trust end, the remaining assets are added to the Belen endowment. Usually, highly appreciated assets, such as real estate or securities, are transferred to the trust, avoiding current capital gains tax. Trust assets are then usually sold and reinvested in different asset classes that provide the needed cash flow to meet the income payout requirements. There are two basic types of payouts: one that is a fixed (annuity) payment; and one that is a stated percentage of the trust assets value as evaluated annually (resulting in variable payments). You will receive a charitable contribution income tax deduction based on your life expectancy, payout rate chosen, and current interest rates. Additionally, you may reduce your estate taxes liability, or may actually increase your income on low yielding assets.
Charitable Lead Trusts (CLT’s)
A charitable lead trust is essentially the opposite of a charitable remainder trust. The income from a lead trust is used to pay a fixed amount annually to Belen Jesuit (instead of you or a designee), and when the trust terminates, the assets are distributed back to you or your heirs. In effect, this is a way to let Belen borrow the asset, receive the income for a stated period, and then give back the asset to your heirs. You receive a charitable income tax deduction in the year of the gift, or the trust can receive charitable income tax deductions annually. Eventually, the balance of the assets (with any appreciation) pass to your children or descendants with a considerable estate and gift tax savings. This type of trust is an excellent way to avoid income tax charitable deduction limitations.
Quite often, individuals find that they have more life insurance than they really need. For example, their children may be grown, and life insurance that was intended to provide education funds is no longer needed. A gift of a life insurance policy, one that is paid up, or one with premiums still due, makes a very good charitable gift. This gift can easily be made by naming Belen Jesuit Preparatory School as both the beneficiary and owner of the policy. Normally, your charitable deduction will be approximately the cash value of the insurance policy at the time of the gift. Some donors even purchase a new policy to give to the school.