I must admit that this is an area that I am far from an expert. But one luxury I have being in the financial planning and investment management business, is that I am exposed to experts in all areas. We like to expose our clients to the best of the best in all areas of the complex world of your financial life. When it comes to estate planning, we have allied with Isenberg, Bottoms & Hyman, LLC who are truly considered among the best in this area in the Atlanta area. Accordingly, I have taped their minds to assist me in writing the Woody’s Goodies that follows. The tool described below is often overlooked, and yet so effective in providing you an income for life, helps your community, and even preserves your estate for your heirs. Are all these things really possible to achieve? The answer is YES.
A WIN FOR YOU – A Charitable Remainder Trust is a trust that you fund currently (usually by contributing to the trust highly appreciated but low yielding assets, like stock you’ve owned for years that have appreciated substantially, but don’t pay a meaningful dividend); then the trust sells the stocks, avoiding capital gains, and re-invest the proceeds in high yielding income producing assets. This income can be provided for life or for a fixed number of years.
Because the trust is not subject to capital gains, (thanks to a nice exemption allowed for these types of trusts in the tax allow), it is able to reinvest its assets without a reduction in principal. If you sold the assets yourself outside of the trust, you would be subject to capital gains tax on the sale and would, therefore, have less money to reinvest. As a result, the trust can often invest more money at a higher rate than you could without a charitable trust. That means a higher income for you. Additional tax benefits include a substantial charitable deduction in the year that you set up the trust and a non-taxed reduction of your otherwise taxable estate.
A WIN FOR THE COMMUNITY – At the end of the trust terms, the assets remaining in the trust are distributed to a charity either for general purposes or for a purpose you designate – perpetuating your legacy of commitment to our community.
· Annual income to you or anyone you designate (often greater than the income from the assets used to fund the trust).
· Income tax deduction in the year the trust is created.
· No capital gains tax on the assets used to fund the trust
· Reduction of your taxable estate.
· A WIN FOR YOUR FAMILY – Option to use the tax savings achieved to purchase life insurance or other investments that replace (or partially replace) for your heirs the value of the assets used to fund the trust. Effectively, you have moved these assets out of your estate tax free and into your family’s hands.
· Maximum income and estate tax planning flexibility.
Best Assets To Use
· Appreciated or Low-Yielding Securities
· Appreciated Real Estate
· Testamentary Retirement Plan Assets (income from a testamentary trust benefits your heirs or anyone else you designate)
The team of professionals we have allied with in this area can expeditiously make this possible for you. We use George Fox of the Fox Law Firm to set up the Trust vehicle. He has done this numerous times for years and years, and our clients compliment his ability to make what seems extremely complex into a quick and painless experience. For the insurance used to replace the assets for your family heirs, we recommend Barry Hyman and Martin Isenberg of Isenberg, Bottoms & Hyman, LLC. They are part of a nationwide network that has enormous negotiating power with the large insurance companies and underwriters. Therefore, they have been extremely effective in getting cases underwritten at rates much less than one could get on their own. George Fox, Barry Hyman and Martin Isenberg have worked together many times in implementing this strategy.
If you feel you are a candidate for using this effective tool, please let me know, and I will quickly put you in touch with what we believe is the best team available in this area.