Wills & Trusts
The best wills are those that clearly reflect the wishes of the will maker concerning how to distribute their property after they die. No state requires specific language to make a will. The will should name your executor, name guardians for young children if appropriate, and state how to pay debts and taxes. You should make it a legal document by signing your will, have two witnesses signature and in most states having the document notarized is recommended. Your witnesses do not need to know what is in the will, just simply know that they are signing your will.
Charitable Remainder Trust
With a charitable remainder trust, a donor can convert an appreciated asset into an income stream, which can dramatically increase the donor’s income by deferring capital gains taxes on the transfer of property into the trust and on the trust’s subsequent sale of the property.
- The donor irrevocably transfers highly appreciated low-income property to a charitable remainder trust.
- The donor enjoys an immediate income tax charitable deduction, subject to limitations, based on the present value of the charity’s remainder interest in the CRT.
- The trustee of the CRT sells the highly appreciated asset and reinvests the full sale proceeds, unreduced by capital gains taxes, in high-income producing assets.
- The donor receives income distributions from the CRT, which greatly improve his/her cash flow and complete the conversion of a highly appreciated low-income asset into an enhanced income stream.
With proper planning and the right tools a donor does not have to abandon a wish to leave a substantial gift to charity out of concern for an adverse effect on the estate desired for family members.
The donor irrevocably transfers property intended ultimately for Legacy, a Foundation of Christian Fellowship Church to a charitable remainder unitrust. (CRUT)
The CRUT uses income from the transferred property to pay the donor an income for life or for a term of up to twenty years.
The donor also establishes an irrevocable life insurance trust (ILIT) in which he or she has no interest or incidents of ownership.
The ILIT trustee buys a life insurance policy on the donor’s life (or a second-to-die policy insuring both the donor and the spouse) with death benefits equaling or exceeding the value of the property transferred to the CRUT.
The donor uses the income received from the CRUT each year to make gifts to the ILIT, which then uses these gifts to pay the insurance premiums.