Charitable Remainder Trusts Offer Some Surprising Benefits
You’ve worked hard and created a modest, but comfortable living. You have always supported charitable causes closest to your heart. You want to leave something important behind in this world, but where do you start?
Understanding the options that are available can be challenging, but Aloha United Way offers guidance in Planned Giving. One of the top recommendations is to set up a Charitable Remainder Trust, or CRT. A CRT offers amazing benefits to donors and the community alike. If you had an opportunity to improve your tax outlook, impact your community, and improve your retirement possibilities would you take it? For Doug Hom and his wife, the answer was, “yes”.
The couple were fortunate enough to have a home, decent jobs, and had accumulated sufficient savings. They care about the causes closest to them. “I’m partial to supporting animal organizations because animals, unlike humans, cannot get help for themselves,” shared Hom. He goes on to say that he and his wife support nonprofits because they are, “compassionate human beings, and have some means to help those less fortunate and who are suffering.” The couple isn’t wealthy, but through some careful planning and a little help, they realized they could make a positive impact.
Why would an individual or couple choose to set up a Charitable Remainder Trust? Doug’s wife bought a townhouse when she was single and the couple were using the property as a rental unit. As landlords, they were often confronted with the stress of finding renters and when the pandemic hit, things seemed to get even more difficult. They managed tenants, paid association and maintenance fees, GE Taxes, property taxes, and worked to maintain an aging property. “We decided we just wanted out and would just sell the townhouse,” Doug said.
It was their realtor who suggested setting up a Charitable Remaining Trust. “We just accepted that we would pay a lot in capital gains taxes and had never heard of a Charitable Remainder Trust.” What the couple discovered was better than they could have imagined. Not only did the couple say goodbye to upkeep, maintenance, property taxes; they are now receiving more monthly income from the CRT. “The cherry on the cake is that after my wife and I die, the remainder of our trust will go to helping our favorite charities,” said Doug. He also continued that next year, the couple should be getting a sizable tax credit for their charitable donations associated with the remainder trust.
The order of operations for setting up a trust of this kind is important. The Charitable Remainder Trust should be set-up before selling any property. It is critical to secure legal counsel and a knowledgeable financial advisor and set-up the CRT before selling your property. The financial advisor or estate planner plays an essential role in the process and selecting a professional with ample knowledge and experience is crucial. Aloha United Way’s Planned Giving professionals understand and are able to assist with information and referrals to make the experience seamless.
Doug and his wife chose to support charities throughout their careers and through their Charitable Remainder Trust will be supporting Aloha United Way, Hawaiian Humane Society, and Navian Hawaii. When Doug was asked why these three agencies in particular he said, “we believe in and hope the funds provide a meaningful impact and sustain the work of these agencies.”
If this sounds like you, contact Aloha United Way for planned giving guidance. Not only can Aloha United Way guide you in giving, they can provide you with information on their more than 350 nonprofit partners in the community.
For more information, connect with Ellen Kazama, Director of Major Gifts & Donor Relations, at ekazama@auw.org.
