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Charitable Remainder Trust (CRT)

A trust is a financial tool that allows some unique investment benefits. In simple terms, a trust is a fund into which you place assets, and then determine the way in which you want those assets distributed. Trusts can be used to fund future costs for education, for holding inherited assets for a minor until the recipient reaches a designated age, for providing income in retirement, or many other uses. Trusts can be funded while the owner is alive, or can be funded after death through their estate plan.

A certain type of trust, called a Charitable Remainder Trust (CRT) can also serve as an option for making a charitable donation. A CRT is established when you make an irrevocable gift into the trust. Once the trust is created and funded, you have options as to who receives the payments from the trust, and the timing of those payments. At a predetermined time, the payments end and the charity receives the remainder of the trust's funds. This is a great option for those who wish to receive a steady income, and also make a substantial gift to ministry.

Here are some examples:

Example 1: Kevin has accumulated a variety of assets over his lifetime, and now must decide on his retirement and estate plans. He needs some supplemental income at this stage of his life, but he doesn't have children who could benefit from inheriting his estate. Kevin irrevocably transfers his funds into a Charitable Remainder Trust and names his church and KML as the recipients of the balance after he dies. During his years of life, the trustee of the fund invests the money and pays a fixed percentage to Kevin on a regular basis. Upon Kevin's death, the remainder is given to his church and KML. This approach provides the dual benefit of helping support Kevin in his retirement years, and also supports two of his treasured ministries.

Example 2: Jeff and Nancy have been very successful with their family business. They made a lot of money and are ready to sell the business and retire. Jeff and Nancy want to share some of their wealth with their children, but they also want to make some donations to their church and KML. Jeff and Nancy establish a Charitable Remainder Trust. They decide that their children will receive payments from the trust for the next ten years. That income will help each of their children get established in their lives and provide some income in advance of their eventual inheritance. The other blessing is that the children will receive that income while Jeff and Nancy are still alive. At the end of ten years, the balance of the funds will be split as Jeff and Nancy had determined - 75% of the funds will go to their church and 25% will go to KML.

Charitable Remainder Trusts can be powerful and beneficial tools within your estate plan, but they also require the drafting of a legal document by an attorney and a rather large financial investment. Consult with your financial or estate-planning professional before making a decision regarding a CRT.

 

To discuss a planned gift to KML, contact your KML Estate Plan and Deferred Gift Counselor, 
Paul Snamiska, at 262-677-4051 x1116 or paul.snamiska@kmlhs.org.

The information that is provided on this site is for educational purposes only. Consult your personal tax consultant, attorney, or financial planner for specifics that apply to your personal situation.