Help Conservation and USLT: Consider a Charitable Remainder Trust

By: Ken Driggers, USLT Counsel

Owners of land spend lots of time considering what will become of their property once they have passed away. They want to use their land and need the income now, but there is no option for family management in future generations. So the question becomes what to do with the family farm in the future.

Landowners in this situation should consider an estate planning tool called a charitable remainder trust. A Charitable Remainder Trust, CRT, is a special tax-exempt arrangement where you transfer cash or assets to a charity now and receive use of the property and income for life. When you or your spouse dies, the property goes to USLT. Other types of assets like stocks can also be placed in a charitable remainder trust.

When you transfer your property to a CRT you will generate an income tax deduction for you in the year you make the transfer. The deduction is based upon the present value of the remainder interest that will ultimately go to USLT. The amount of deduction is based upon several factors. You have five additional years after the initial year to use all of your federal tax deduction.

You can continue receiving income from the property after you have taken your deduction. Your minimum payout rate from the trust is 5% of the annual income and the maximum is 50%. You will gain more control by using a CRT as you will be giving USLT the amount the government would normally take after you have passed. You will reduce your income and estate taxes. You can also sell what you put in the trust with no capital gains taxes.

A charitable remainder trust is most useful when a donor has substantial resources and owns highly appreciated assets that earn a low rate of return (like stock) or cost the donor money to maintain (such as land). This is a good option with landowners with land that has grown in value over their lifetime.

Supporting the Upper Savannah Land Trust through a CRT is a generous way to donate a legacy gift to further land conservation in the South Carolina Piedmont. When you pass away, the remaining assets in the CRT will pass to USLT without the expense and delay of probate. Charitable remainder trusts are a generous way to provide significant long-term financial support to USLT as well as immediate income for you and your family.

If you are interested in discussing a CRT, please contact our executive director, one of our board members or me.