Build a Legacy – Charitable Remainder Trust

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Charitable Remainder Trust

A Charitable Remainder Trust (CRT) is a life income gift that enables you to give today (with immediate tax savings) while retaining use of the asset. After a prescribed period of time or upon your death, the asset is transferred to one or more charities.

In essence, you irrevocably transfer a property (investments, real estate, work of art, etc.) into a trust to be managed by a trustee (a financial institution, yourself, a lawyer or other individuals), name Adventure Place as the remainder beneficiary in trust, and reserve an interest in the property for life. The remainder interest in the property transfers to Adventure Place.

A trust document names the interest income beneficiary. You receive a tax receipt based on the net present value of the remainder interest.

The result of this planned gift is that you can receive income or use of the property during life.

The immediate tax deduction available to you depends on the value of the property, your age, beneficiary and other beneficiaries, and the period of time that the income interest will exist.

The tax receipted value of your remainder trust will provide an income tax receipt in the year of the gift and may be carried forward for the following five years. Our team will be pleased to discuss the many tax, estate and personal planning benefits of these trusts.

A Charitable Remainder Trust is a way of giving assets Adventure Place, through a trust agreement. It can be established by contributing bonds, stock securities, mutual funds or real estate to a trustee that you who holds and manages it. You may choose a Charitable Remainder Trust because you have an asset that you would eventually like to give to Adventure Place, but you need the income that provides now, or you do not wish to part with your asset now.

 

The Benefits to You:

  • Your trust can provide you with a lifetime income
  • Tax advantages
  • A charitable tax receipt is issued upon transferring assets to a trust that names Adventure Place as the capital beneficiary
  • The five-year carry-forward provision allows effective tax planning while you are alive rather than the one-year carry back upon death
  • The government has allowed a beneficial tax treatment of capital gains on these gifts
  • The capital gains are frozen and are dealt with at today’s value
  • Your trust can be managed professionally, freeing you from daily investment decision or market concerns
  • Your gift is not subject to probate fees and other estate costs
  • The trust retains your assets until death, at which point Adventure Place will receive the remainder of the property in the trust
  • We will publically recognize you for your contribution

How does a Charitable Remainder Trust work?

You receive a charitable tax receipt for the fair market value of the remainder interest, which is calculated by a Canada Revenue Agency 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.

 

Costs

Before creating a trust, the total cost of setting up and administering it must be weighed against the future reduction of tax and other benefits that it will provide. 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, which means you cannon reverse the transfer once it has been completed;
  • The amount of the charitable tax receipt is determined by a formula set down by Canada Revenue Agency, which takes into account your life expectancy and the present value of the assets;
  • Valuations are required to determine the value of 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 Adventure Place strongly recommends that you seek professional advice to ensure that your financial goals are considered, your tax situation reviewed and that your planned gift is tailored to your circumstances.

For more information, please call:
Debbie Modrovsky, Business Director
416-744-7650, ext. 224 | dmodrovsky@adventureplace.ca

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