Charitable Remainder Annuity Trust: FAQs

Who can serve as trustee of my annuity trust?Layer Closed

In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.

How would the assets in my annuity trust be invested?Layer Closed

Typically, such a trust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. An annuity trust may also hold tax-free bonds.

Is it better to give cash or appreciated securities?Layer Closed

Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

How will income from my annuity trust be taxed?Layer Closed

Your income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal. If you desire to know your taxation rates when you fund your life income gift, you might want to consider a charitable gift annuity or deferred gift annuity.

Can I name my children as income beneficiaries?Layer Closed

Yes, subject to certain limitations.

What are the tax deduction implications of my charitable remainder trust?Layer Closed

A Charitable Remainder Annuity Trust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.


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