As a Ventura County estate planning law firm specializing in charitable trusts, our firm commonly recieves questions about the details of charitable trusts. We have a team of experts with the legal knowledge to answer questions about the process of setting up a charitable trust, and what the benefits of proper estate planning can be.
Our firm can provide expert legal services as estate planning attorneys. We are a Southern California based law firm in business since 1985. We specialize in charitable trusts and estate planning matters.
To learn more about charitable trusts, or if you would like a free consultation to learn if a charitable trust is right for you, please do not hesitate to contact us at (805) 482-2282, or e-mail us.
What will determine my income tax deduction?
If you set up a CRT, you will almost surely receive a deduction on your federal and state income tax returns. The deduction equals the fair market value of the charitable remainder interest. The valuation of the remainder to charity is made at the time the trust is established and is equal to the actuarially determined present value of assets that are likely to go to charity at the termination of the trust, and the payout percentage you decide to receive from the CRT.
Therefore, the older you are or the lower the CRT payout percentage is the higher the resulting value of the charitable remainder interest, and so the higher is the income tax deduction. For example, if a 65 year old person puts $300,000 into an 8 percent unitrust the income tax deduction would be about $101,211, and so with a 34.7% tax bracket saves $35,120 in income taxes.
However, this deduction has the same limitations as regular charitable deductions. For example, the deduction you can take in one year arising out of contribution of appreciated property is limited to 30% of your adjusted gross income. Any excess deduction, however, may be carried forward to the following five years.
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