Legacy Income Trusts

Looking for income as well as tax benefits while giving then I think we have something to share with you.

Individuals with highly appreciated investments, a need for income, and a desire to financially support a charity have likely been introduced to Charitable Remainder Trusts (CRT). The way the trust works is that the donor receives an income stream for life based on the amount contributed, and a charity receives the remaining balance of the trust when the donor passes away. Although CRTs do provide a means of making a donation where no one has to pay capital gains, receiving a tax deduction and a lifetime income stream, the complexity and costs associated with them have made them cumbersome at best. This is especially true for donors with smaller portfolios that are not the highest income earners.

Recently we brought on new clients whose needs caused us to research other strategies that might provide similar benefits to CRTs. This led us to the U.S. Legacy Income Trust.

The benefits of this trust:

  • Donor receives a higher deduction than a CRT
  • The high level of income distributed to them is tax-advantaged (unlike the ordinary income treatment of CRT disbursements)
  • Reporting is greatly reduced
  • Expenses are far less than CRTs
  • Donors to the Legacy Trust retain the right to choose which charities to support

This unique strategy is not right for everyone, but when it fits, it can be very beneficial to the donor receiving income and to the charity of their choice.

If you are interested in finding out more, please don’t hesitate to contact us. You might also want to take a look at this link where you’ll find more details about these trusts.

Jack Schniepp is a CERTIFIED FINANCIAL PLANNER™ (CFP®, ChFC®) and the owner of Cascade Financial Strategies. CFS is a registered investment advisor licensed in Oregon, California and Idaho. They specialize in socially responsible investing which integrates environmental, social, and corporate governance (ESG) criteria into portfolio construction.