August 25, 2021

Request for Action: Charitable Remainder Trust

I would like to make you aware of one of the administration’s current tax proposals that would negatively impact some of the largest donors to your ministry.

The proposal concerns gifts of appreciated assets (most commonly stocks or real estate) that are given to Charitable Remainder Trusts (CRTs).  CRTs are a wonderful way for your donors to work with the Foundation, often gifting their very largest gift in a way that will provide quarterly income for a number of years to family members, and then make an outright gift to your ministry.  These gifts are popular with parents who believe their children would benefit from receiving regular quarterly distributions of income, rather than one large gift.  They are also popular with seniors who want to put in place tax-advantage retirement income, and then leave their largest gift to you at their death.

Currently, appreciated assets transferred to a CRT are received by the CRT at their full fair market value – providing an ultimate gift to you that has not been reduced by taxes.  The administration’s proposal is to make the gift to the CRT a “realization event” – meaning that your donors would need to pay taxes on the non-charitable portion of appreciated assets given to their CRT.  I believe that enactment of this proposal will bring an end to larger gifts of appreciated assets to CRTs, significantly reducing the ultimate gifts to your ministry.  We currently have gift agreements in place to receive over $10 million of new CRT gifts, benefitting Disciples ministries, in the not-too-distant future. These gifts are in jeopardy. This tax proposal is ill-conceived, as the individuals receiving an income from a CRT do pay taxes on the income they receive.

Charitable Gift Planners (CGP) is a nation-wide organization that advocates for charitable organizations.  CGP has written a letter regarding the administration’s proposal on CRTs (termed “Split-Interest Gifts” because they create a gift to both the donor’s human beneficiary as well as your ministry).  I would strongly encourage your ministry – whether a general unit, region, or local congregation – to add your voice along with mine, and respectfully ask our representatives to exclude transfers of appreciated assets to CRTs from the proposed legislation that would tax non-charitable transfers of such assets.

If you’re willing to join me in signing this letter, you may find it here. All that is required is your ministry’s name, city and state, and your name and email address.

Gary W. Kidwell