What is a charitable remainder trust? A charitable trust is like a will, in that it directs your assets to their proper end when you die. A will, however, can be contested or changed after you are gone—a charitable trust cannot be contested or changed. A charitable trust and a will should not be considered as exactly alike—they are not the same thing. You may actually need a trust and a will depending on your personal situation. A charitable trust is simply an unchangeable document that states what you want to do with your assets in the present and in the future.

Should I set up a trust? A charitable remainder trust may be the very best estate planning option you have.

Charitable trusts protect people and assets. When properly drafted and administered, charitable trusts do what you want them to—like a will set in stone. The charitable remainder trust (CRT) is tax-exempt, which means you don't pay capital gains taxes, recapture taxes, estate taxes or gift taxes on the sale of an asset. The CRT also qualifies you for a significant tax deduction, is creditor protected and grows tax-free. The CRT is a very beneficial strategy to increase your lifetime wealth and security.

Are there any other differences between taxable trusts and the tax-exempt charitable trust? Yes. But first you should know that tax-exempt trusts do everything a taxable trust does. They protect you, your assets and carry out your wishes after you die. But, when you place your assets into a charitable trust, the remaining assets are turned over to your favorite charity when you die. The trust is irrevocable (once implemented it cannot be undone) and may not be passed onto heirs.

Why would I set up a charitable trust if it means I can't leave my money to my children? I wouldn't do that in my will. Most people only feel comfortable leaving a substantial gift to charity if they and their children are financially secure first. This makes perfect sense. When you set up a charitable trust with CCF, an additional trust may be created for your heirs with the help of First Volunteer Insurance. This second trust is called an Irrevocable Life Insurance Trust (ILIT). The proceeds are tax-exempt, so your children will receive the full value of the inheritance you wish to leave them and not pay any estate or gift taxes—and, you may arrange for your heirs to receive their inheritance within days. You may also control how the ILIT funds are dispersed to heirs just as you would in a will.

Here's how the insurance trust works.

When you set up your charitable trust, you will determine how you want to make it grow in a diversified investment portfolio. We will help you with this and administer the process. You will also determine how much money you would like to be paid each year from your trust. This is your annuity.

In a charitable remainder trust, there basically two types of money. There is the money you will take out and spend—and there is the money that will stay in your trust and eventually go to your favorite charities.

CCF with the help of First Volunteer Insurance concurrently sets up and administers the ILIT and funds our of your charitable trust—not your income stream. This way your desired income is not affected, you're not burdened with the management responsibilities of the additional trust and your heirs receive a better gift from you than originally intended—tax-free.

The result? You receive more lifetime income, your family receives a larger tax-free inheritance and you are able to leave a family-named gift to your favorite charity.

What may be placed in a charitable trust?

Virtually any asset—so long as it is not debt-encumbered. (If your have less than 50% debt on an asset you may still consider a CRT. When submitting your information on the next page, simply subtract the debt portion from the total value or asking price of the asset when entering in your information in the ESTIMATED TOTAL VALUE OF ASSET field, on the next page. Example: If you have an asset worth $500,000 and a debt of $100,000 then enter in a total value of $400,000.)

You may fund a charitable trust with real estate, stocks, a business, your home, any asset. For instance, suppose you'd like to sell your property to help fund your retirement. By deeding the property to a charitable trust, you no longer pay capital gains taxes on the sale. The same is true for the sale of any asset. By avoiding capital gains taxes, the sum to support your retirement is now significantly larger. Certain calculations will estimate how much will remain in the trust at your death and you will receive an immediate tax deduction based upon this future gift amount. The deduction may be carried over for six years. Also, your trust investments will compound tax-free—so if your trust earns 8% annually, it really is 8%. You may also place CDs and mutual funds into a charitable trust. Considering the various benefits of a charitable trust and the inheritance solution provided by CCF, a charitable trust may be the very best option for your financial future.

Are there any other benefits with the charitable trust?

Yes. Not only have you secured your financial future for yourself and your heirs—you're also leaving a substantial gift to the charities of your choice. You may even desire to establish a family foundation. In this way, your legacy and values may be carried on for generations.

For more information by phone, please call (423) 668-4888

The insurance products that First Volunteer Insurance Agency, Inc. offers our customers and customers of First Volunteer Bank are: *Not a deposit *Not FDIC Insured *Not Insured by any Federal Government Agency *Not Guaranteed by the Bank *May Go Down in Value