By Crystal Langdon

www.crystalclearfinances.com 

There are several ways an individual can continue to provide for their family and financially support New Yorker’s Family Research Foundation (NYFRF). TIn this article, I discuss the Charitable Remainder Trust (CRT), in combination with an Irrevocable Life Insurance Trust (ILIT).

A standard CRT allows an individual to place assets or cash into a trust. This CRT will provide an income stream to the donor for a specified period of time. This time period can be for life or for a set term of years. The donor will not only receive an income stream but will also receive a charitable tax deduction for a portion of their contribution. When the donor passes away, NYFRF would receive the remaining proceeds from the CRT.

Sometimes, family members who are in line to receive an inheritance can become concerned over this arrangement. There is a way to satisfy the donor who desires to give to NYFRF and provide an inheritance for family members. You can accomplish this by combining the CRT with a wealth replacement vehicle, which in this case would be an ILIT.

An ILIT is created by an irrevocable trust. Once established, the donor can place cash or income producing assets into the trust. The trustee of the trust uses this income to purchase life insurance on the donor’s life. If the donor is married, the trust can purchase a second-to-die policy instead. The trust becomes the owner and beneficiary of the policy. At the time of death, the life insurance death benefit is paid to the trust. Then, according to the trust agreement, it is paid to the family members.

Let’s look at how these two estate planning vehicles can work together. The donor places his assets or cash into the CRT and names NYFRF as the beneficiary. The CRT pays an income stream to the donor. The donor takes the income stream and places it in the ILIT to purchase life insurance on the donor’s life. At the time of death, the family members receive a tax free death benefit from the ILIT and the NYFRF receives the assets within the Charitable Remainder Trust.

This is a simple cost effective way to make tax deductible gifts. It provides flexible planning for charitable gifting, capital gains tax relief on appreciated assets, professional investment man-agement, full administration and reporting, and avoids the cost and complexities of establishing a private foundation.

For individuals who do not have the assets needed to open various types of trusts or gifting vehicles, there is an avenue that can be just as beneficial — a regular life insurance policy. Simply determine the amount of insurance that you need to provide for your family in the event of your death and then determine the amount you would like to leave to help NYFRF. On your beneficiary form, list the percentage or amount of the death benefit you would like left to your family and the amount to be given to NYFRF. You can add this beneficiary request to any existing policy by writing a letter of instruction or calling your insurance agent.