CHARITABLE REMAINDER TRUST
A Charitable Remainder Trust is a way of giving assets to Campbellford Memorial Hospital Foundation through a trust agreement. A Charitable Remainder Trust can be established by contributing bonds, stock securities, mutual funds or real estate to a trustee who holds and manages it. You may chose a Charitable Remainder Trust because you have an asset that you would eventually like to give to Campbellford Memorial Hospital Foundation, but you need the income it now provides, or you do not wish to part with your asset right now.
How You Benefit From A Charitable Reminder Trust
Income:
Your trust can provide you with a lifetime income.
Tax Advantages:
- A tax receipt is issued upon transferring assets to a trust that names Campbellford Memorial Hospital Foundation as the capital beneficiary.
- The five year carry forward provision allows effective tax planning today rather than the one-year carry back upon death.
- Beneficial treatment of capital gains: If appreciated property is donated to the trust, only those gains attributed to the residual interest are recognised.
- The capital gains are "frozen" and are dealt with at today's value.
Worry Free Management:
Your trust can be managed professionally, freeing you from daily investment decision or market concerns.
Eliminates Probate and Estate Fees:
Your gift is not subject to probate fees and other estate costs.
Avoids Will Challenges:
Trust assets are not considered part of your estate.
Protects Privacy:
By transferring assets to a trust, your decision is private.
Control:
The trust retains your assets until death, at which point Campbellford Memorial Hospital Foundation will receive the "remainder" of the property in the trust.
Recognition:
You and your gift can be honoured during your lifetime.
How does a Charitable Remainder Trust work?
You receive a donation receipt for the present fair market value of the remainder interest calculated by a Revenue Canada formula that takes into account your life expectancy and the present value of the property being transferred into the trust. Valuations are required to determine a value of the remainder interest.
Charitable Reminder Trust - Costs
The total cost of setting up and administering the trust must be weighed against the future reduction of tax and other benefits before creating a trust. The assets within the Charitable Remainder Trust should be worth at least $150,000 to offset any fees. The fees are tax deductible.
Important points to remember include:
- The transfer of assets to the trust is irrevocable, that means you cannot change it once the transfer is completed;
- The amount of the tax receipt is determined by a formula set down by Revenue Canada, which takes into account your life expectancy and the present value of the assets;
- Valuations are required to define a value to the remainder interest.
Please Seek Expert Advice
If you are thinking about transferring assets that have appreciated in value, you should seek expert advice from a tax specialist or financial planner. Campbellford Memorial Hospital Foundation strongly recommends professional advice to ensure that your financial goals are considered, your tax situation reviewed, and your planned gift is tailored to your circumstances. For further information, please call our office at 705-632-2014.