Give and Receive with a Charitable Remainder Trust

Scientific research suggests it really is better to give than to receive — that spending money for the benefit of others may lead to longer-lasting happiness than spending money on yourself.¹ However, by structuring a donation using a charitable remainder trust (CRT), you might have the best of both worlds: a substantial gift to your favorite charity and a flow of income during your lifetime.

To understand the potential benefits of a CRT, consider what would typically occur if you sold assets, such as securities or property, in order to give the proceeds to a charitable organization. In most cases, you would incur capital gains taxes on any appreciation in asset value, which would reduce the value of your charitable contribution (if you paid the taxes out of the proceeds) or require an out-of-pocket expenditure. Although you might receive an income tax deduction in the year of your donation, you would receive no further financial benefit from the contribution.

A Strategic Approach

With a CRT, you donate by first placing the assets in the trust. In addition to naming the charitable organization as the first beneficiary, you can designate an income beneficiary — yourself or anyone else you choose — to receive specified payments from the trust for a set term of up to 20 years or for your lifetime (or the lifetime of your surviving spouse or designated beneficiary). Income payments must be made at least once a year and may be fixed or variable depending on the type of CRT you use. Upon your death (or the death of your surviving spouse or designated beneficiary), the assets in the trust go to the charity.

After the assets are transferred to the charitable trust, the trustee may sell them and reinvest the proceeds in income-producing assets without incurring capital gains taxes. This maintains the full asset value to fund your specified income and could increase the ultimate value of the gift to the charity.

Although the annual trust income is usually taxable, you may qualify for an income tax deduction based on the estimated present value of the remainder interest that will eventually go to the charity.

Types of CRTs

A CRT can be an inter vivos (living) trust funded during your lifetime or a testamentary trust funded at your death for the benefit of your heirs. In either case, there are two basic types of CRTs, with significant differences in the payment structure.

A charitable remainder annuity trust (CRAT) pays a fixed percentage of the trust’s initial value to the donor (or selected beneficiary) each year. A charitable remainder unitrust (CRUT) pays a set percentage of the trust’s  annual fair market value to the donor (or selected beneficiary) as income each year. The appropriate structure depends on your personal preference and situation, including your age, risk tolerance, and income needs, as well as the type of asset.

A Win-Win Proposition

A CRT could be a win-win proposition for you and your favorite charity. However, it’s important to remember that a CRT is an irrevocable trust. Once you’ve made your decision, you cannot change your mind.

While trusts offer numerous advantages, they incur up-front costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of experienced estate planning, legal, and tax professionals before implementing such strategies.

1) Psychological Science, December 27, 2018

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.

Is It Time to Step Up Your Digital Marketing?

In a 2019 poll, 28% of Americans said they are now online “almost constantly,” up from 21% in 2015.¹

Consequently, digital marketing is a cost-effective way to reach a larger audience of potential customers. Here’s how you can put your company’s best foot forward.

Put Your Website to Work

Your company website is not just the public face of your business. Ideally, it’s also the hub of your digital marketing program. To accomplish this, it doesn’t need to be elaborate, but it should be attractive, functional, and mobile-friendly. Otherwise, potential customers may keep scrolling until they find a competing site that they can view and navigate more conveniently.

Creating local business listings in online directories could make your website more visible on search engines. You can do this manually or use a service designed to ease the process and improve results.

It’s also important to take advantage of useful analytics tools that collect, report, measure, and analyze data on website visits, page views, bounce rates, search terms, and more. This information can provide insight on prospective customers and help gauge the effectiveness of marketing efforts. The data is often presented on a dashboard with tables or charts, which makes it easier to understand the numbers and track trends.

Use Social Media Wisely

Social media can help you build relationships with your existing customers and widen your exposure in the marketplace. Established platforms such as Facebook, Instagram, Twitter, LinkedIn, and Pinterest are all household names. Facebook still has the most traffic, but Instagram and Snapchat have become popular with young adults (ages 18 to 29).² Another platform may be a better match for your industry or customer base.

Joining social media sites may be free, but buying ads can be costly. Moreover, managing one or more profiles demands a significant amount of time and effort.

Try to share helpful information and avoid posting negative or controversial content. A contest that gives users a chance to win a prize, or a generous coupon, may be all you need to attract a following.

Sharing photos and video has also become essential, largely because your followers are more likely to notice and respond to your posts and, best case, pass them along to their own social networks.

1–2) Pew Research Center, 2019

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.