Charitable Remainder Trust

An irrevocable trust may be used to provide the donor or a loved one with a fixed annual income or an income which varies with the value of the trust. A portion of the trust qualifies for an income tax deduction. At the death of the last income beneficiary, the assets in the trust are distributed to Maine Public. This option is great for multiple charitable beneficiaries. It allows for the donor to change the named beneficiaries and change start/stop time frame.

A charitable remainder trust provides a donor with a lifetime income and a charitable income tax deduction. The donor selects the payout rate, usually between 5% and 7%. The higher the payout rate, the lower the charitable income tax deduction. This gives the donor, and perhaps the donor’s spouse, an income every year for life. If the donor funds the trust with appreciated securities, the donor will avoid capital gains taxes. The donor may choose the trustee to manage the trust. The trustee may invest in almost any investment, including tax free bonds. A donor may designate the trust for the benefit of MPRN and establish a fund in his or her name at death.

Donors may choose from two types of charitable remainder trusts: the annuity trust and the unitrust. The annuity trust pays a fixed, guaranteed dollar amount regardless of the trust’s investment performance. The income rate is determined at the time the trust is funded. The annuity trust is best for donors who seek a regular, fixed income and prefer to have the satisfaction of knowing the amount of the payment in advance.

Alternatively, the charitable remainder unitrust pays the donor a predetermined percentage of the fair market value of the trust’s assets as revalued annually. If the trust’s assets increase, the donor receives a larger payment, providing a hedge against inflation. Additional contributions may be made to a unitrust.

Summary of Benefits:

  • Avoid capital gains taxes on the transfer of appreciated property.
  • Increase dividends ranging from 1% to 2% from dividends to as much as 6% or more
  • Obtain a charitable income tax deduction.
  • Provide income to one or two beneficiaries for life.
  • Establish an outright gift or an endowed fund at MPBN through the trust.

For additional information, please contact Scott Marchildon at 207-330-4510 or smarchildon@mainepublic.org today — and thank you!