Part 86

Charitable Remainder Trusts are effective financial tools of mutual benefit to the donor and to the Scottish Rite.

Recently we had the pleasure of recognizing Illustrious Bro. Laurance Jones III, 33°, from the Valley of Charleston, West Virginia, as a Supreme Temple Architect and as a member of the Pillars of Charity for his generous contribution to the Scottish Rite Foundation, S. J., USA, Inc. An original oil portrait by Jean Pilk of Ill. Jones (see front cover) is now displayed in the Temple Architects Hall of Honor along with a bronze plaque in the Pillars of Charity Alcove in the House of the Temple. Brother Laurance's personal essay about his own language disorder as a child and his desire to support the RiteCare* Program, Scottish Rite Masons Helping Children Communicate, was featured in the November issue of the Scottish Rite Journal's "Where Do You Do Your Shopping?" column. His essay explains how he came to the decision of establishing a charitable remainder unitrust for the Scottish Rite Foundation, S. J., USA, Inc. Brother Laurance, we thank you for your generosity!

Grand Commander C. Fred Kleinknecht, 33°, was pleased to confer with Ill. Laurance Jones III, 33°, during a recent visit by Ill. Jones to the House of the Temple.

To provide additional information on charitable remainder trusts for Scottish Rite members and friends, this column is pleased to feature the following brief presentation on the subject by Jeffrey Strzeclzyk, Corporate Vice President, UBS PaineWebber Inc.

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If you're like many investors today, you may own appreciated assets, such as stock or real estate, that you are reluctant to sell because of the significant capital gains taxes you would owe. At the same time, you may be looking to increase your cash flow or diversify your holdings. That would mean selling those valuable assets, paying the applicable taxes and reinvesting at less than the asset's full value. Fortunately, there is a solution to this investment dilemma—the Charitable Remainder Trust (CRT).

What Is A Charitable Remainder Trust (CRT)?

A CRT is an irrevocable trust that is designed to convert an investor's highly appreciated assets into a lifetime income stream without generating estate and immediate capital gains taxes. CRTs have become very popular in recent years because they not only represent a valuable tax-advantaged investment but also enable you to provide a gift to one or more charities that have special meaning to you. By establishing a CRT, you can:

• Eliminate immediate capital gains taxes on the sale of appreciated assets, such as stocks, bonds, real estate and other taxes;
• Reduce estate taxes of up to 50% that your heirs might have to pay upon your death;
  Reduce current income taxes;
• Increase spendable income throughout your lifetime;
• Make a significant future charitable gift;
• Receive the benefits of tax-free compounding;
• Avoid probate;
• Maximize the assets your family will receive after your death.

How Does A CRT Work?

When you establish a CRT, you or another beneficiary, such as your spouse or another family member, receive income from the trust for life or for a period of years.

When the trust ends, the remaining assets pass to the qualified charity or charities of your choice. Here's how it works:

• You irrevocably transfer cash, securities, or other property you own into a CRT.
• As a result of this transfer, you lower the taxable value of your estate and provide significant estate tax savings to your heirs.
• You select the type of CRT based on your individual needs. There are two types, an Annuity Trust and a Unitrust. The type of trust you select will determine how much income you receive from the CRT.
• You receive an immediate charitable income tax deduction based on 1) your age or the ages of those named as income beneficiaries; 2) the distribution rate chosen; and 3) the value of the assets put into the trust. (Any excess deduction may be carried over for up to five additional years.)
• If the assets are sold within the CRT, the trust pays no immediate capital gains tax since a CRT is considered a tax-exempt entity.
• At the termination of the trust, the trust assets will be distributed to the qualified charity or charities you have selected.

Types Of CRTs

There are two types of CRTs. If you choose the Annuity Trust option, you will receive annual fixed payments. The amount you receive would be equal to a fixed percentage, which must equal at least 5% of the initial fair market value of the assets in the trust. Once an Annuity Trust is created you cannot add more assets to it.

A second type of CRT is the Unitrust. If you choose this option, you will receive variable, rather than fixed, payments. In this case, you would receive lifetime payments based on the value of your assets in the trust. Your payments would be equal to a percentage of the value of the trust as it is revalued each year and must be at least 5%. Unlike the Annuity Trust, you may make additional contributions to a Unitrust after it is created.

If you would like more information about the benefits of adding a Charitable Remainder Trust to your estate plan, please contact the Scottish Rite's Development Office at 1–800–486–3331, Ext. 143.

To learn more about the Scottish Rite Pooled Income Fund, click here. For a chart illustrating Scottish Rite Foundation, S.J., USA, Charitable Gift Annuity Rates–Single Life, please click here.

Scottish Rite Foundations, Southern Jurisdiction Pledge Form

At this time, we are unable to accept these pledges over the Internet.
Please print out and mail in the form below. Thank you.

Scottish Rite Foundations, Southern Jurisdiction Pledge Agreement

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Ill. Thomas M. Boles, 33°, G.C. (left in photo) has worked extensively in fund-raising for children's programs throughout our Fraternity. For more information on planned giving, call Bro. Tom at 562–691–4227 (Fax 562–691–5327) or the Scottish Rite Foundation, Southern Jurisdiction, U.S.A., at 202–232–3579, ext. 143. Ill. Earl E. Ihle, Jr., 33°, is our development team's Director of Major Gifts. He has been a member of the Fraternity for 25 years and served in 1978 as Master of Lafayette Lodge, No. 111, Baltimore, Maryland. He is also a member of Boumi Shrine Temple in Baltimore, the York Rite, and a dual member of the Scottish Rite Valleys of Baltimore and Washington, D.C. You can reach Bro. Ihle toll free at 1–800–486–3331, ext. 143.