Case Study
Jane ’55 and her husband John want to save for their three-year-old granddaughter’s college education, but they also want to make a significant gift to Smith in honor of Jane’s 50th reunion. A charitable remainder trust can help them do that. In the process they will reduce their taxable estate, which will benefit all of their heirs.

Blue chip stocks inherited from Jane’s father 25 years ago, in which there is a large capital gain, are a good asset to turn into a charitable remainder trust for their granddaughter’s benefit.

Here's how the Term-of-Years Charitable Remainder Trust works:

Jane donates $150,000 of appreciated stock to trust

Jane claims a charitable tax deduction of approximately $50,000

Trustee sells the stock in the trust with no capital gains tax ramifications for Jane*

Trustee invests for growth of principal during first 15 years. Assuming 8 percent growth rate over that period and a 6 percent payout during the last four years, the granddaughter will receive approximately $28,000 each year, between ages 18 and 21

At end of trust term (when granddaughter turns 21), the remaining principal will pass to Smith to create an endowed scholarship fund