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If you have built a sizable estate and also are looking for ways to receive reliable payments, consider a charitable remainder trust. This type of trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create. At the end of the trust term, the balance in the trust goes to the Montana Community Foundation to support our mission and benefit one or more of the hundreds of endowment funds we manage.
These types of gifts may offer you tax benefits, including the Montana Endowment Tax Credit, and the option for income. There are two ways to receive payments and each has its own benefits:
The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.
The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
Susan, 75, wants to make a gift to MCF to benefit the endowments of her local library and Boys & Girls Club, but would also like more income in the future. Susan creates a charitable remainder unitrust with annual lifetime payments equal to 5% of the fair market value of the trust assets as revalued annually. She funds the trust with assets valued at $500,000.
Susan receives $25,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. Because Susan is a Montana taxpayer, her gift qualifies for the maximum Montana Endowment Tax Credit of $10,000 as well as a federal income tax charitable deduction of $301,905* in the year she creates and funds the trust. These tax benefits will save Susan at least $96,610 in her 32% federal tax bracket and generate enough Montana tax credit to cover all of her Montana state tax liability in the year of her gift.
*Based on a 3.6% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
Submit a few details and see how a charitable remainder trust can benefit you.
Legal name: Montana Community Foundation
Address: 33 S. Last Chance Gulch, Ste. 2A Helena, MT 59601
Federal tax ID number: 81-0450150
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.View My Guide