Charitable remainder trusts/Gifts of residual interest
If you have cash or an asset that you have considered leaving to The Arthritis Society in your Will but would like the tax benefit now, then a charitable remainder trust or a gift of residual interest may be your answer.
Trusts protect assets and ensure that a designated beneficiary will receive them upon your death. You would be entitled to all the income generated within the trust during your lifetime. A lawyer can set up a trust for you.
There are different types of trusts:
- Capital remainder trust - the capital within the trust must remain intact during the donor’s lifetime.
- Charitable remainder trust - can only name a charity as a beneficiary (as opposed to an alter ego trust, which can name other beneficiaries as well). The charity issues a tax receipt for the discounted present value of assets transferred to a charitable remainder trust. The tax credit from this receipt can be used to offset current income. Any unused portion can be carried forward five years.
The trust is the owner of any of its assets. (The individual establishing the trust does not own the assets, so these cannot be included in a Will.) The trust and its assets are not subject to probate and probate fees. The trust also protects against Wills Variation Act claims. Privacy is another advantage of trusts, as they do not become publicly filed documents.
The transfer of an asset that has increased in value since it was purchased will trigger capital gains tax at the time of its transfer to a trust, unless the donor is 65 or older. A person who is 65 or older can transfer assets to an alter ego trust without triggering gains so long as he or she is the only person entitled to the income and capital of the trust during his or her lifetime.
Gifts of residual interest
A gift of residual interest allows you to donate an asset today (personal residence, work of art, investment property) to The Arthritis Society, and enjoy the use of it for the rest of your life. A tax receipt is issued for the fair market value of the donated asset. The allowable tax credit is based on the cash amount or market value of the property, your age, and current interest rates.
How to arrange a trust or a gift of residual interest
Discuss your gift intentions with your lawyer, financial advisor or tax advisor. Then you or one of these experts representing you can contact the Planned Giving team to arrange these gifts.
Trusts and Gifts of Residual Interest
Trusts and gifts of residual interest offer immediate tax benefits.
Talk to Us
Speak to someone about your giving options.