Change The Lives Of Many. Use Real Estate And A Charitable Remainder Trust To Save Taxes and Help A Cause.

By Laura Huntley October 21, 2018

Change The Lives Of Many. Use Real Estate And A Charitable Remainder Trust To Save Taxes and Help A Cause.

The real estate market has yielded significant increases in property values in the last years.  You may own a luxury home, a vacation, or rental home or commercial real estate and would like to cash in while the market is hot.  Change the lives of many.  Use real estate and a charitable remainder trust to save taxes and help a cause.

Is there a cause that just speaks to you or helped you in your life journey? 

Wouldn’t it be gratifying to volunteer and see the impact of your efforts?  But imagine how you can even bigger impact for decades to come.

What is our responsibility to give?

“Whoever has two coats must share with anyone who has none; and whoever has food must do likewise.” (NRSV, Luke 3:10-11)

“The man who dies…rich dies disgraced.” Andrew Carnegie (1835-1919), industrialist and philanthropist, in his essay The Gospel of Wealth, in which he claimed to “solve the problem of the Rich and the Poor.” Meaning the only credible option for those with surplus wealth is to use it during their lifetimes for the common good.   And that to do otherwise is a disgrace. He and numerous wealthy individuals donate and administer large fortunes for charitable purposes.

“Teach your children well…”

A contribution to a charitable remainder trust during your lifetime benefits lives for years to come.  It also leaves a legacy of philanthropic values with your family.  I suggest that it is an example of the classic “pay it forward” and the “gift that keeps on giving”.  This is both in an economic sense and in the virtues, it instills upon future generations.

What is a Charitable Remainder Trust?

A charitable remainder trust’s tax, financial and philanthropic benefits have made it a key component of a well-crafted estate plan. When planning your estate or developing a wealth plan, you may have different objectives in mind.

  1. Receive important tax benefits
  2. Increase spendable income for yourself and/or another family member
  3. Diversify an investment
  4. Outpace inflation
  5. Control the distribution of your assets

A charitable remainder trust is a special financial vehicle designed to meet your estate, investment and tax planning needs. It can provide you, your family and your estate with significant tax and asset management advantages today.  It will also leave a lasting legacy to your favorite charity for years to come.

How a Charitable Remainder Trust Saves Taxes.

The tax-exempt status of a charitable remainder trust is why it offers significant tax benefits. The charitable remainder trust was established by the Tax Reform Act of 1969 to introduce substantial charitable giving advantage. Over the years, thousands of families have enjoyed the increased cash flow and tax savings resulting from this trust. The charitable remainder trust has become, and remains, one of today’s most effective and efficient estate planning vehicles. By establishing a charitable remainder trust, you can:

  1. Escape immediate recognition of capital gains taxes on the sale of appreciated assets
  2. Increase spendable income while reducing risk by diversifying a  concentrated investment (the asset) in your portfolio
  3. Receive a current-year, charitable income tax deduction
  4. Reduce estate tax liabilities faced by your family by removing the assets for your taxable estate at your death
Change The Lives Of Many. Use Real Estate And A Charitable Remainder Trust To Save Taxes and Help A Cause.

How to use Real Estate with a Charitable Remainder Trust.

In order to use real estate with a charitable remainder trust, first, identify any real estate which has increased in value.  If selling this real estate will create a taxable gain, this is a property to consider.

The process of using a charitable remainder trust and the real estate that has increased in value begins with a signed letter of intent from you.  This letter states a willingness to give the property to the charity. Then a real estate broker’s opinion of property value is obtained.  A real estate questionnaire is completed showing:

  1. Type of property
  2. Mortgage, liens, and encumbrances on it
  3. Whether there are leases
  4. Information about any environmental issues

The charity’s real estate gifting team will review the proposed gift and information to decide whether it is a gift they may be interested in accepting. If it is, the information is presented to the charity’s Board of Directors for approval to move forward and begin due diligence.

There are costs to conduct the due diligence process.  As a result, a donation agreement must be signed by the donor for the charity to proceed. The donation agreement commits you to transfer the property to the charity at the option of the charity.

The charity’s due diligence process includes title review; environmental reviews; reviews of lease agreements, if applicable; and other steps as necessary.  It is during this step that a local real estate professional markets the property under the terms of the donation agreement.

Bottom Line, Change The Lives Of Many. Use Real Estate And A Charitable Remainder Trust To Save Taxes and Help A Cause.  I Can Help.

Take advantage of the high real estate values we are experiencing now.  Contact me for more information and for a free analysis of the value of your real estate properties.