Trusts: Choose From Two Ways to Donate
Uncover the Option That Matches Your Goal
What if you could support World Wildlife Fund's conservation work, provide for your heirs, and reduce your taxes with one gift? With charitable trusts, you can do it all. This guide offers helpful information on two popular types of charitable trusts.
There are generally two types of charitable trusts—a charitable remainder trust and a charitable lead trust. Both types of trusts split the assets between a charitable and non-charitable beneficiary. The main difference between a charitable remainder trust and a charitable lead trust is when World Wildlife Fund receives your gift.
Remainder trust: WWF receives the remainder after your lifetime or a term of years.
Lead trust: WWF receives the gift first, with the remainder going to individuals you choose.
The following few pages have detailed information on both types of trusts. Contact your financial advisor as you consider which type may be right for you.
Receive Income for Life or a Term of Years
With a charitable remainder trust, you receive a stream of income for your lifetime or a set term of up to 20 years. The income may be greater than what the assets currently yield. If you wish, your spouse or another individual can receive an income from the trust after your lifetime. At the end of the trust term, the remaining balance goes to World Wildlife Fund.
This chart describes the two basic types of charitable remainder trusts.
| Charitable Remainder Unitrust or Annuity Trust: Which Is Best for You? |
||
|---|---|---|
| Gift Plan | Charitable Remainder Annuity Trust | Charitable Remainder Unitrust |
| Payments | You receive fixed income for life or a term of years | You receive variable income (based on the trust’s value each year) for life or a term of years |
| Donor Profile | Generally for those older than age 70 seeking to make a substantial gift and receive a higher income for a short period of time | Generally for those older than age 55 seeking to make a substantial gift |
| Features |
|
|
| Funding | Cash or securities, typically $100,000 or more | Cash, securities, or other assets, typically $100,000 or more |
Reduce Taxes and Give to Your Heirs
With a charitable lead trust you transfer cash or assets, which are appreciating in value, into a trust with the intention of supporting WWF first, then returning the remaining assets to your family.
The major benefit of creating a lead trust is in reducing estate and gift taxes that apply when transferring assets to family members.
Types of Payments
The trustee makes payments from the trust to the selected charity or charities as either a fixed annuity payment or a percentage of the trust.
An annuity payment: With this type of payment, WWF receives the same amount annually whether trust assets appreciate or depreciate. If the trust income is insufficient, the trustee uses principal to make up the difference.
A unitrust payment: With this option, we receive a variable amount based on a specified percentage of the fair market value of the trust assets, valued annually. You set the percentage upon creating the trust. The payments fluctuate with trust appreciation or depreciation. If the trust income is insufficient, the trustee uses principal to make up the difference.
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