charitable trusts september 2015
TRANSCRIPT
![Page 1: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/1.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
Charitable TrustREMAINDER VS LEAD
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
WHAT DOES THE CHARITY RECEIVE?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
REMAINDER TRUST REMAINDER
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
LEAD TRUSTDISTRIBUTIONS
COMPARISON REMAINDER TRUST
REMAINDERThe charity receives periodic
distributions from a charitable lead trust with the remainder going to another party. A charitable remainder trust is
the opposite. Periodic distributions go to a third party and the charity receives
whatever is left and the end.
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
WHAT DOES THE CHARITY RECORD?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/R
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS
![Page 7: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/7.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/R
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS
In a lead trust the charity is not in control of the assets. It is entitled to the periodic distributions. The distributions are accounts receivable to the
charity. In a remainder trust the charity is in control of the assets. The trust assets are not
shown as a receivable. Rather, they are recorded as assets of the charity.
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/R CREDIT REVENUE
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS CREDIT DUE TO
And REVENUE
![Page 9: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/9.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/RCREDIT REVENUE
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS CREDIT DUE TO
And REVENUE
Under a lead trust the charity credits revenue only. Under a remainder trust the charity has recorded
the trust assets on its balance sheet, and therefore have a liability for the amount due to the party that
will receive distributions. The charity recognizes revenue for the diff between the assets and the
liability.
![Page 10: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/10.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
HOW DO WEVALUE THEREVENUE?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/R CREDIT REVENUE
PV OF DISTRIBUTIONS
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS CREDIT DUE TO
And REVENUE
ASSETS – PV OF DISTRIB
![Page 12: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/12.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/RCREDIT REVENUE
PV OF DISTRIBUTIONS
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS CREDIT DUE TO
And REVENUE
ASSETS – PV OF DISTRIB
Under either trust, the distributions stream is discounted to present
value.
![Page 13: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/13.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON LEAD TRUSTDISTRIBUTIONS
DEBIT A/R CREDIT REVENUE
PV OF DISTRIBUTIONS
REMAINDER TRUST REMAINDER
DEBIT TRUST ASSETS CREDIT DUE TO
And REVENUE
ASSETS – PV OF DISTRIB
REVENUE IS RESTRICTED
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
WHY WOULDA DONOR
DO A CHARITABLE TRUST?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
BECAUSE:
1. They have a taxable estate, &2. They would donate anyway.
![Page 16: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/16.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
WHY WOULDA DONORDO A CLT?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
CURRENT TAX DEDUCTION
DISCOUNTED ESTATE TAX
DISCOUNTED GIFT TAX
BENEFITS
![Page 18: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/18.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
CURRENT TAX DEDUCTION
DISCOUNTED ESTATE TAX
DISCOUNTED GIFT TAX
BENEFITSThe donor gets a current income tax deduction
for the present value of the income stream attributable to the charity. Assets values are
locked at what they were on the date they were contributed to the trust. That’s good for gift tax
purposes if they pass to other beneficiaries while the donor is still alive. That’s good for estate tax
purposes if they pass after the donor dies.
![Page 19: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/19.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
WHY WOULDA DONORDO A CRT?
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
CURRENT TAX DEDUCTION
AVOID CAPITAL GAINS TAX
GETS APPRECIATED ASSET OUT OF YOUR ESTATE
BENEFITS
![Page 21: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/21.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
CURRENT TAX DEDUCTION
AVOID CAPITAL GAINS TAX
GETS APPRECIATED ASSET OUT OF YOUR ESTATE
BENEFITSThe donor gets a current income tax deduction
for the value of the assets less the present value of the income stream. Appreciated assets can be
contributed to the trust and then sold at no capital gains tax. Donor is generally subject to tax on distributions. The assets are out of your estate – the charity gets them at the end of the
trust. It’s a good one to use if you hate your kids.
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
Alternatives to CRTCHARITABLE GIFT ANNUITIES AND POOLED INCOME FUNDS
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
DONOR BUYSANNUITY FROM
CHARITY
CHARITABLE GIFT ANNUITY
![Page 24: Charitable Trusts September 2015](https://reader036.vdocument.in/reader036/viewer/2022081604/58a66d8c1a28abb47e8b5871/html5/thumbnails/24.jpg)
@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON DONOR GETSTAX DEDUCTION
INCOME STREAM (ANNUITY)
CHARITY GETS ASSETS
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
NO TRUST,JUST A CONTRACT
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
DONOR INVESTSIN A MUTUAL
FUND
POOLED INCOME FUND
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
COMPARISON DONOR GETSTAX DEDUCTION
INCOME STREAM (MUTUAL FUND DISTRIBUTIONS)
CHARITY GETS ASSETS UPON DEATH OF
DONOR
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@CFARRELLCPA. THIS PRESENTATION IS A GENERAL DISCUSSION OF THE SUBJECT MATTER AND IS NOT APPLICABLE TO ALL CIRCUMSTANCES.
EASY FOR THEDONOR