Increase Your Estate Utilizing a Charitable Remainder Trust

Are you a charitable person? And how would you like to give to charity and still increase your estate, hence expand your worth? Then a charitable remainder trust could be your path to achieving that. We already discussed the basic concept in our article Charitable Remainder Trust And What It Can Do For You. Now we’ll show you using some numbers.

The Numbers

Let’s say your net worth is $10,000,000. You have heirs, but you also want to give to a charity. Using a charitable trust, you can actually give to both. You establish a trust and place $5,000,000 worth of real estate in it. The trust sells the property rather than you. If your acquisition price was $1,000,000, then your capital gains are $4,000,000. In North Carolina, if you sell the property you have a tax liability of $219,960 (5.499%). The federal capital gains tax is 15%. This means you have a total tax liability of $819,960. However, since the sale was made by a trust, the sale is tax exempt. Now the trust can reinvest the entire $5,000,000. If the reinvestment bears 6%, then you are making roughly $49,000 per year more.

In addition, you made a charitable donation and can take a tax deduction for that year. You can use this money to purchase a life insurance policy and name yours beneficiaries. This policy’s death benefit replaces the assets that you donated. Your heirs will inherit a death benefit check, which is tax free.

Let’s Increase Your Estate

As you can see in the example above, you can give money away and still grow your worth. In addition, you pass on your wealth with less strings attached. If this type of planning is something you’re interested in, then let’s start to increase your estate. Each case is highly personal and confidential. To start a conversation simply fill out the form below and let’s schedule a free consultation.

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