This is the time of year when many charitable organizations ramp up their fundraising efforts to remind us of the importance of helping people, communities and wildlife.
Charitable giving helps others and can be personally rewarding; it can also be a powerful lesson for our children. For my daughters’ birthday parties, I leverage Echoage, a great online platform that allows guests to contribute to a group gift and a not-for-profit charity of my daughters’ choice. Choosing charities like Sick Kids and Because I Am a Girl helps my girls appreciate how fortunate they are and that it is important to share their good fortune.
As you consider your own gift-giving this season, you might want to explore creating a Charitable Remainder Trust (CRT). This is a great way for people who are passionate about supporting causes, cures, and community initiatives to benefit from the income generated by their assets while communicating their future charitable intent. A CRT can also protect your assets from possible challenges to your Will.
An innovative way to leave a legacy
A Charitable Remainder Trust (CRT) involves transferring property or assets into a trust whereby the settlor retains a life interest in the income generated by the property or assets (capital) but makes an irrevocable gift of the capital/residue to a registered charity. There cannot be any capital encroachment provisions in the trust agreement. The charity’s interest in the property is irrevocable.
Benefits of a Charitable Remainder Trust
Upon the creation of the Charitable Remainder Trust, the settlor receives a tax receipt for a donation tax credit (based on an actuarial calculation of the net present value) in respect of the charitable contribution. Clients have the ability to obtain a tax deduction now but are not giving the funds to the charity until they pass away.
Clients can carry forward the tax deduction to future tax years.
Anyone, including a spouse or child, can be the income beneficiary. It doesn’t have to be the settlor—or it can be both individuals. In this way, it is similar to an annuity product that provides a continuous income stream.
There are so many important and compelling charitable causes that would benefit from even a modest donation, which can go a long way to leaving a proud legacy for you and your family. I encourage you to support whichever organization speaks to your heart.
Please reach out if you would like more information about a CRT and are interested in leaving a powerful, meaningful legacy.
Article by Martha Moen for Concentra