Other Charitable Giving Strategies
Placing assets into a charitable trust can provide you and/or your heirs with lifetime income while enabling you to make a meaningful gift to your favorite charity or charities. Charitable trusts may also help eliminate capital gains taxes and reduce your income and/or estate taxes.
The following are a variety of gifting options that can be tailored to your specific philanthropic, family and financial goals. The following descriptions are the most common charitable trust vehicles. Our trust officers can discuss the advantages of each, and which option might be right for you.
Charitable Remainder Unitrust (CRUT)
A charitable remainder unitrust provides you and/or your designated beneficiaries with an annual income while you are alive, with the remainder of the trust assets going to a designated charity when you or your surviving beneficiaries pass away. Income payments are a fixed percentage (minimum 5%) of the trust’s asset value, based on an annual valuation of the assets. Once established, the trust cannot be revoked, but you may make additional contributions to the trust over time.
Charitable Remainder Annuity Trust (CRAT)
Like a CRUT, a charitable remainder annuity trust provides a supplemental income to you and/or your designated beneficiaries, but the payments are based on a fixed dollar amount each year, usually calculated as a percentage (minimum 5%) of the initial value of the trust assets. While you are assured a steady income stream, the payment amount may not be changed, and additional contributions to the trust are not allowed. The designated charitable organization receives the remainder of the trust when you or your surviving beneficiaries are gone.
Charitable remainder trusts may provide immediate charitable income tax deductions and annual supplements to your income.
Charitable Lead Annuity Trust (CLAT)
A charitable lead trust is a way to make a significant gift to charity with assets you currently do not need, and eventually want to pass on to your heirs. Once established, a CLAT remains in place for a specified number of years, during which time the charity receives an annual income stream, based on the value of the trust. When the charitable term of the trust expires, the trust assets are distributed to the donor’s designated beneficiaries.
Testamentary Charitable Lead Annuity Trust (T-CLAT)
A testamentary charitable lead annuity trust is similar to a CLAT, but takes effect upon your death. The terms of the trust are established by you in advance, including the number of years and income amount to be distributed to the designated charity. When the charitable term of the trust expires, the remaining assets are distributed to your designated beneficiaries.
Both types of charitable lead trusts can be effective tools for reducing gift and estate taxes while benefiting charities and keeping assets in the family.
If you would like to learn more about how First Hawaiian Bank’s Philanthropic Services team can help you plan and manage your charitable legacy, call us at 525-8119 (Oahu) or toll-free at 1-888-287-0398 to set up a complimentary assessment of your philanthropic goals. You can also visit any conveniently located First Hawaiian Bank branch and ask for a Wealth Advisor.