Make provisions for family and charity with a charitable trust at Napa Valley Community Foundation. There are two charitable trust options that may be right for you.
Provide life income with a charitable remainder trust
It’s easy to establish a remainder trust. Cash or property is transferred to the trust. You may choose to receive a fixed income or one that changes with market conditions—income from the charitable remainder trust you establish may add up to more than interest and dividends you earned from holding the assets. A portion of the income may be a tax-free return of principal, while some is taxed as ordinary income or capital gains. The income amount depends on the payout rate selected by the donor, and the allowable tax deduction depends on the age of the income recipient, the payout rate, and the discount rate (as determined by the Internal Revenue Service).You can use income from the trust to supplement your own lifestyle or that of someone else: a sibling, a dependent parent, a friend or a former employee. Upon your death, the assets left in the trust will be put to use in benefiting the community.
Choose from these options:
- Annuity trust pays you a fixed dollar amount
- Standard unitrust pays you an amount equal to a fixed percentage of the net fair market of the trust and is recalculated annually
- Net income unitrust pays you the lesser of the fixed percentage specified by the trust agreement or actual trust income; some net income unitrusts allow you to make up deficiencies in past years
- Flip unitrust is a net income unitrust that converts to a standard unitrust upon a triggering event, such as the sale of an asset used to fund the trust
Build a charitable fund with a lead trust
This form of planned giving entitles you to a number of financial benefits. It protects investment earnings from tax and offers gift, estate, and generation-skipping tax benefits. For example, trust assets are removed from your estate for estate tax purposes. You may also capture future gift tax deductions. At the time the trust is established, however, you may owe gift tax on the present value of your gift to the final beneficiary.
You can create a charitable lead trust during your life or through your will. The trust contributes to charity through the Community Foundation—either for a number of years or for your lifetime. During its term, the Community Foundation's trust experts will steward the investment, which may help your assets grow over time. When the trust terminates, its final assets, including any growth, are transferred to those you designate, often with significant transfer-tax savings.
Choose from these options:
- Unitrust makes annual distributions of a fixed percentage of the trust assets to the charitable fund you establish
- Annuity trust guarantees the charitable fund you establish a fixed dollar amount each year
What inspires you to get involved? See how your gifts have made a difference.