What is a Testamentary Charitable Remainder Trust?
A testamentary trust is funded at the time of the donor's death. It makes regular payments to the donor’s surviving spouse or other named income recipients for life, a term of up to 20 years or both. The amount remaining in the termination of the trust will go to the donor's choice of funds at the Foundation, benefitting charities or areas of charitable work recommended by the donor. InFaith Community Foundation is available to act as trustee for testamentary charitable remainder trusts that will benefit charitable funds at InFaith. In order for InFaith to act as trustee, a few requirements must be met. Please contact a Gift Planner to discuss these requirements or call 800-365-4172.
Current minimums for charitable remainder trusts range from $50,000 to $200,000, depending upon the specific type of charitable remainder trust (CRAT or CRUT) and the gift asset(s) used to create it.
How to Establish a Testamentary Charitable Remainder Trust
- Call InFaith and speak with a Gift Planner at 800-365-4172. InFaith will prepare a customized illustration for your client showing the income and tax benefits of creating this type of trust.
- If the donor wishes to proceed, he/she will need to complete and return the Fund Workbook, Charitable Remainder Trust Application, IRS Form W-9 for each income beneficiary. We will then draft a Fund Agreement for the donor’s review and signature. Along with the Fund Agreement, we will send sample language for the donor’s attorney to insert into their will or living trust to create the CRUT upon their passing.
- If the asset used to establish the trust is from IRA or retirement plan assets, appropriate paperwork to make the beneficiary designation change must be completed by the donor.
More on Testamentary Charitable Remainder Trusts
The trust is created through specific language included in the donor’s will or living trust by the donor’s attorney. InFaith will provide this special language. Upon the donor’s death, the executor or trustee of the estate transfers assets to the trustee of the charitable remainder trust.
This type of trust can be established with virtually any type of asset(s), such as life insurance, commercial annuities or retirement assets. By using retirement plan assets to establish the trust, the donor may be able to bypass possible income and estate taxes imposed on retirement assets.
- Clients who are looking to reduce estate taxes.
- Clients who want to provide an income to loved ones after death.
- Clients who want to ensure a gift to charity after death.
Tax and Financial Benefits for Your Client
- Client receives an estate tax charitable deduction.
- Client’s loved ones receive regular payments for life, term or years, or both.
- Client may avoid income and estate taxes imposed on retirement assets.
Resources to Support Your Work
- Testamentary Charitable Remainder Trust Product Sheet
- Gift Calculator for Gift Annuities and Trusts
- Customized Illustrations (use the request form or call InFaith)
- Your Values Your Giving brochure
- Give Now, Give Later, Give & Receive brochure
- Tools & Resources for Financial Professionals