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Realize tax deductions while taking care of your family and your favorite charities

Establishing a trust is complex, and to ensure your gift is properly administered, we are happy to work with your legal and financial advisors. There are two types of charitable trusts: charitable remainder trusts and charitable lead trusts. Both will help you take care of your family and your favorite charities.

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By gifting assets to establish a charitable remainder trust, you receive an immediate tax deduction and lifetime income for you or your named beneficiary/ies. You also reduce or avoid capital gains taxes associated with the gifted asset. Eventually, when the trust's term is complete, the remaining assets pass on to Communities Foundation of Texas to be used for charitable good.

There are two types of charitable remainder trusts:

Charitable Remainder Unitrust

The beneficiary of a charitable remainder unitrust receives an amount each year determined by multiplying a fixed percentage by the fair market value of the invested assets of the trust which are valued annually. Upon the beneficiary’s death, or a term not to exceed 20 years, payments terminate and the unitrust assets go to a fund at CFT or a named nonprofit organization. Payments, therefore, fluctuate with the market and may provide a hedge against inflation. 

Charitable Remainder Annuity Trust

The beneficiary of the trust receives a fixed dollar amount annually. Upon the death of the beneficiary or a term not to exceed 20 years, payments end and the annuity trust assets are transferred to a fund at CFT.

A charitable lead trust has a different order of events than the charitable remainder trust. Payments are made to CFT and your fund for a charitable lead trust term measured by the remaining lifetime of an individual or a predetermined number of years (there is no 20-year limit as with charitable remainder trusts), with either a reversion to the original donor or other named individuals.

There are two types of charitable lead trusts:

Charitable lead unitrusts pay CFT an amount determined by multiplying a percentage (set at the outset) by the net fair market value of the trust assets valued annually. Then the trust principal goes to the non-charitable remainder persons (or in rare cases reverts to the donor).

During periods of low interest rates, the annuity payment option is attractive for donors, as more assets may be passed on to heirs with reduced or eliminated gift or estate tax costs.

Charitable lead annuity trusts pay CFT a fixed dollar amount set at the outset for the term of the trust. Afterward, the principal goes to the non-charitable remainder persons (or in rare cases reverts to the donor).

A charitable gift annuity is a way for you to receive a guaranteed income for life and an immediate income tax deduction, while at the same time leaving a charitable legacy.

Through a charitable gift annuity, you receive a fixed stream of income for life. After paying the lifetime annuity to you and your spouse, the remaining principal will be used by Communities Foundation of Texas (CFT) to benefit the community or is transferred to your named charitable fund to accomplish your specific charitable goals.

How to establish a charitable gift annuity
In exchange for your charitable gift, CFT agrees to make fixed payments for life to one or two annuitants. The size of the payment is determined at the time the gift is made and will not fluctuate with the market. We establish gift annuities in amounts of $10,000 or greater.

If you choose to defer payments for longer than a year, you can take a larger immediate charitable income tax deduction and receive a higher payout once payments begin.

When you contribute to a gift annuity, you decide which charitable organization or cause your gift annuity contribution will ultimately support.

You receive an immediate income tax charitable deduction for a portion of your gift, and this deduction can be taken over as many as six consecutive tax years. If your gift is funded with appreciated assets, you normally have a reduction in capital gains tax as well.

Are you ready to leave your charitable legacy?

Donors and their families are at the heart of everything we do at CFT. Our charitable experts can work with you to define your family's charitable interests and goals to create a charitable giving strategy that works powerfully both now and for generations to come.

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