LEAVING YOUR LEGACY So, what’s next? You are likely not alone in asking yourself this question. And given events of the past eight months, I think it is safe to say that no one else on this earth really knows, either. And that can be unsettling. In addition to the unknown FUTURE, there have also been a lot of changes in our lives, TODAY. There have been changes in how we worship, how we shop, and how we interact with one another. There have also been changes in retirement income rules and regulations. The new CARES Act made substantial changes to the 2020 distribution requirements, as well as to the long-favored Stretch IRA option. And, given even more uncertainty looking toward the upcoming elections—no one really knows what’s next regarding taxes, Social Security, or market performance.
So, what’s a person to do? First, if you have not done so already this year, please reach out to your financial planner or advisor. They will be aware of the impacts of recent legislative changes and will be able to offer guidance and encouragement to help you weather the future. Second, if you are concerned about the demise of the stretch IRA, capital gains taxes, and want to talk about securing income for the long term, you may want to explore a Charitable Remainder Unitrust (CRUT).
WHAT ARE THE BENEFITS OF A CHARITABLE REMAINDER UNITRUST? Once established, the benefits of a CRUT for you and your heirs are substantial: · Receive income for life, for a term of up to 20 years, or life plus a term of up to 20 years for you or the recipient of your choice · Avoid capital gains on the sale of your appreciated assets. Receive an immediate income tax deduction for the charitable portion of the trust · Establish your legacy of philanthropy to the non-profit of your choice
HOW DOES A CHARITABLE REMAINDER UNITRUST WORK? Working with your qualified nonprofit organizations, the steps are pretty simple. · Make your gift. Donate IRA assets, cash, stocks, bonds, real estate, or other appreciated assets and receive a partial tax deduction. The income tax deduction is based on the type of trust, the term of the trust, the projected income payments, and IRS interest rates that assume a certain rate of growth of trust assets. · Determine who will receive the income and for how long. Based on how you set up the trust, you or your stated beneficiaries can receive income annually, semiannually, or quarterly. Per the IRS, the annual payments must be at least five percent, but no more than 50 percent of the trust’s assets.
Sarah J. Malchow Director of Philanthropy
· The qualified non-profit administrates the trust based on your decisions, and, after the specified timespan or the death of the last income beneficiary, the remaining assets are distributed to the designated charitable beneficiaries. When the CRUT terminates, the remaining assets are distributed to the charitable beneficiary—leaving your philanthropic legacy and supporting their mission.
If you would like to learn more about Charitable Remainder Unitrusts or if you have other questions about planned and estate giving, please contact me, 262.338.4625. It would be my pleasure to help! cedarcommunity.org
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