Trusts

Charitable Remainder Trusts
Looking for a way to leave a legacy to Badin High School? If you have built a sizeable estate and are also looking for ways to receive reliable payments, you may want to check out the advantages of setting up a charitable remainder trust.

Benefits of a charitable remainder trust include:

• A partial charitable income tax deduction
• Potential for increased income
• Up-front capital gains tax avoidance

There are two ways to receive payments with charitable remainder trusts:

The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.

The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.

Check Out this Potential Scenario
Patricia, 60, wants to make a gift to Badin but would also like more income in the future. Patricia creates a charitable remainder unitrust with annual lifetime payments to her equal to 6 percent of the fair market value of the trust assets as revalued annually. She funds the trust with assets valued at $250,000.

Patricia receives $15,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. She is eligible for a federal income tax charitable deduction of $81,305* in the year she creates and funds the trust. This deduction saves Patricia $22,765 in her 28 percent tax bracket.

*Based on annual payments and a 2.4 percent charitable midterm federal rate. Deductions vary based on income earned.

Learn How to Fund It
You can use the following assets to fund a charitable remainder trust:

• Cash
• Securities
• Closely Held Stock
• Real Estate
• Tangible Personal Property
   

Charitable Lead Trusts
Do you want to benefit from the tax savings that result from supporting Badin, yet you don’t want to give up any assets that you’d like your family to receive someday? You can have it both ways with a charitable lead trust.

There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to Badin and is more attractive when interest rates are low.

A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust’s assets go up in value, for example, the payments to Badin go up as well.

Check Out this Potential Scenario
David would like to support Badin and provide for his children. Following his advisor’s recommendation, David funds a charitable lead annuity trust with assets valued at $800,000. David’s trust pays $56,000 (7 percent of the fair market value) to Badin each year for 15 years, which will total $840,000. After that, the balance in the trust goes to his children. His gift tax deduction is $698,488* against the $800,000 of his assets. Therefore the only difference ($101,512) is subject to gift tax, which is offset against his lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to his family at zero additional cost in gift and estate taxes. Had David given the $800,000 outright to his children, it would have been a taxable gift.

*Assuming annual payments and a 2.4 percent charitable midterm federal rate.

Learn How to Fund It
You can use the following assets to fund a charitable lead trust:

• Cash
• Securities
• Closely Held Stock
• Real Estate
   

Next Steps

• Contact Brian Pendergest at 513-863-3993 or bpendergest@BadinHS.org about supporting Badin by setting up a charitable remainder or lead trust.
• Talk to your financial or legal advisor to learn which assets will or will not trigger taxable income when paid to a beneficiary.
• If you include Badin in your estate plans, please use our legal name and Federal Tax ID:
  Legal Name: Stephen T. Badin High School
  Address: 571 New London Road, Hamilton, OH 45013
  Federal Tax ID Number: 31-0537113

The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.