Charitable Remainder Trusts

You may have an asset you wish to donate to the Pacific Northwest Ballet, or you may have an asset that is under performing and you would like to improve your cash flow from it. You may be reluctant to sell the asset and reinvest in something more productive because of substantial capital gains taxes. As an alternative, you might consider a charitable remainder trust that can be established benefiting you and, in the long run, providing support for Pacific Northwest Ballet's future.

You transfer the assets into a trust and designate a trustee. The trustee manages the assets, which involves selling them and reinvesting the proceeds as appropriate, and pays income to you (or other designated beneficiaries). When the trusts sells appreciated assets, it pays no tax on the gains. Payments can be a fixed amount (annuity trust) providing you the security of the same payment each time; or payments can be based on a stipulated percentage of trust assets (unitrust), providing you with possibility that payments may increase. When the trust terminates, the remaining principal is used to benefit Pacific Northwest Ballet. The CRT has additional benefits:

Provides you and/or other beneficiaries annual payments for life or a specified time
Provides an immediate income tax deduction for a portion of the value of the assets transferred
Converts low or non-income producing assets into cash flow without incurring capital gain taxes
Can provide supplemental income for retirement
May provide estate tax savings

Planned Giving at Work
Mr. & Mrs. T, ages 68 and 65, own undeveloped land worth $250,000, which they originally bought for $50,000. They contribute the land to a charitable remainder unitrust, which will pay them 6% of the trust principal annually. They pay no tax on the capital gain when the trusts is established or when it sells the land. They also receive an income tax deduction of $76,555. If the trustee's investments earn a net total return greater than 6 percent, their annual payments grow. By the time the remainder is transferred at the end of their lives, the trust principal may have grown, possibly providing an even larger endowed scholarship fund for aspiring PNB dancers.

(Example uses the August 2008 discount rate of 4.2%.)

We would be pleased to prepare a free illustration showing how a charitable remainder trust would work in your situation. From information you provide this illustration will indicate the income tax charitable deduction to which you would be entitled, along with other information to help you in your decision. Please contact Lilah Ostmann, Major Gifts Officer, at 206.441.3594 or LOstmann@pnb.org for more information.

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