Our Unique Approach
Charitable Remainder Trusts
Charitable Remainder Trusts (CRTs) are an ideal financial and estate planning tool for owners of appreciated real estate as they offer maximum flexibility to the donor. A CRT allows a donor to place a major gift of cash or property into a trust. The trust then pays a fixed percentage of the CRT assets revalued annually to the donor or the donor’s specified beneficiary each year. Upon death or a date specified by the donor, the remainder of the assets in the CRT are donated to a charitable organization of the donor’s choosing.
Establishing a CRT can often be a complicated process — particularly when a real estate donation is involved. With RealGiving Solutions, all the donor has to do is make the decision to donate the real estate and we do the rest. Once the real estate donation has been made, RealGiving Solutions uses a unique process to convert the real estate to cash, invest the donor’s assets and make current income distributions to the donor or specified beneficiaries.
- Converting donated real estate to cash — Our Real Estate Monetization (REM) solution is used to analyze, professionally manage and monetize donated property. Our powerful REM solution allows us to handle any type of property anywhere in the United States. The net cash proceeds are then gathered into a CRT.
- Current income distributions — The CRT makes annual current income distributions to the donor or beneficiaries as a fixed percentage of the CRT’s assets, revalued annually. As the value of the CRT’s assets rises and/or falls on the annual valuation date, payments to beneficiaries will vary accordingly.
- Investing donor’s assets — The cash proceeds from the monetization process are invested by the CRT to meet the individual donor’s investment objectives. Donors may request to keep their existing relationships in place by recommending that the trust hire the donor’s financial advisor to oversee the investment decisions of the trust.
The diagram below provides an overview of the RealGiving Solutions approach to converting donated real estate to a current income stream and eventual charitable donation.
RealGiving Solutions
Maintaining the Value of Inheritance
Many real estate donors are concerned with maintaining the value of inheritance to their heirs. This can easily be done by combining charitable giving with an Irrevocable Life Insurance Trust, also known as a Wealth Replacement Trust. The Wealth Replacement Trust buys an insurance policy on the donor’s life, usually in an amount equal to the charitable gift. Every year, the donor transfers assets to the Wealth Replacement Trust (using income from the CRT) to cover the cost of trust administration and the life insurance.
A Wealth Replacement Trust restores the assets of the donor’s estate that have been used to make a charitable gift, so heirs are often made “whole,” receiving life insurance proceeds equal to or greater than the original real estate donation. When funded from the CRT cash payout, life insurance proceeds pass to heirs both income and estate-tax free.
The diagram below provides an overview of how once a CRT is established, it can work together with a Wealth Replacement Trust to leave assets to both a charity as well as to heirs.
