News and Publications

Charitable Trusts May Support Financial Stability and Giving Goals

Back to Archive

Financial milestones like inheriting assets or selling a business can be life-changing, and – in some cases – empower you to make a great difference in the lives of others through charitable giving.

When a financial influx occurs and an individual wants to make a significant charitable gift, donors should work with their financial advisors in partnership with the Delaware Community Foundation to determine the best timing and tools for their philanthropy.

Through wise choices, donors can give generously while also maintaining financial stability for themselves and their loved ones. This is where charitable remainder annuity trusts and charitable remainder unitrusts may come into play.

Mike DiPaolo, VP for Southern Delaware

Establishing a CRAT or CRUT may result in significant tax advantages and is part of a strategic philanthropic journey. Typically, these trusts are funded with a large contribution of cash or other assets and require the upfront cost of an attorney to draft the necessary documents.

A CRAT or CRUT is a split-interest gift – it supports both your philanthropic goals and your financial needs. It’s a way to both create an income stream for yourself or a loved one and get a charitable deduction on your taxes. CRATs distribute a fixed annuity amount each year, and additional contributions are not allowed. CRUTs distribute a fixed percentage of the balance of the trust assets annually.

A key part of setting up a CRAT or CRUT is selecting the trustee, income beneficiary and charitable beneficiary. The DCF can be a trusted partner and help in several ways, including serving as trustee.

When named as a trustee, the DCF handles the required administration of the trust and ensures the income beneficiary receives payments on schedule. At the end of the term of the trust, the fund established or selected at the DCF is the beneficiary of the remainder, ensuring the long-term charitable impact you desire.

When the trust is managed well, a CRAT or CRUT has the potential to provide for a large charitable gift, even after years of providing financial support for the donor or the donor’s loved one. The DCF can be a trusted partner in this complex process, working with you and your financial advisor to help you make a life-changing impact on the causes that matter to you.

(Full article published in the Cape Gazette)