CRT – Questionnaire

Step 1 of 12

CHARITABLE REMAINDER TRUST QUESTIONNAIRE

please input your answers right on this questionnaire and scan/email or fax it back to me. Not all questions will apply to the trust you choose, so please do not be concerned at the length of this questionnaire. This trust is irrevocable, so it is important that you consider all aspects of it. We will go over these answers on the phone and any questions you may have. There will no doubt be questions you may not know how to answer. That is why we will spend considerable time thinking through all the replies. Don’t worry about leaving questions blank. They are there to promote a discussion that leads to a successful trust design for you. Thanks.

CHARITABLE REMAINDER TRUST IN GENERAL

This trust has been in the Internal Revenue Code since 1969. While it has had some revisions, it is essentially unchanged. The trust “splits” the interests in the asset you contribute; (1) First there is an “income interest” paid to you or another individual (and in some cases to an entity), and (2) whatever remains in the trust after the income interest has expired (whether for one more lives or for a term of years up to 20 years), that which remains is irrevocably dedicated to one or more charities, hence the name charitable “remainder” trust. What the charity receives is called “the remainder interest”. You can think of this split as the fruit (the income produced) and the tree (the assets ultimately going to charity that produced the fruit for you).

CHOOSING YOUR TYPE OF CHARITABLE REMAINDER TRUST

ANNUITY TRUST

STANDARD VERSION (SCRUT)

NET INCOME UNITRUST WITH DEFICIENCY MAKE-UP

NET INCOME WITHOUT DEFICIENCY MAKE-UP

FLIP UNITRUST (CHANGE OF METHODS UNITRUST)

ANNUITY TRUST

Referred to as a CRAT (Charitable Remainder Annuity Trust), this trust pays a fixed dollar amount based on a percent you set in the trust instrument times the initial value of money OR assets transferred to the trust. You can make only one contribution. The annuity amount never changes, even though the trust asset value may increase or decrease.
UNITRUST — 4 VARIATIONS
STANDARD VERSION (SCRUT)

Referred to as a CRUT (Charitable Remainder Unitrust) or SCRUT (Standard Charitable Unitrust).This trust pays a fixed percentage times the yearly trust asset value, valued as of the first business day of the year. Therefore, the payout fluctuates with the asset values each year. Additional contributions are allowed.
NET INCOME UNITRUST WITH DEFICIENCY MAKE-UP

Referred to as a NIMCRUT, this trust is like the one just above with a major exception. The trust pays the smaller of two amounts—the percentage you set in the trust document or the actual net income of the trust (which may be drafted to be only “ordinary income”, dividends, interest, rents, royalties, annuities, etc, or to include additionally realized net capital gains). In years when the trust pays less than the percentage you set in the document, a “deficiency” is written in the books of account. If in later years the trust earns more than the percentage you set in the document, the trustee must pay any back deficiency up to the amount of earnings in excess of the fixed percentage amount. Thus, prior years’ deficiencies may be able to be distributed with later years’ excess earnings.
NET INCOME WITHOUT DEFICIENCY MAKE-UP

Referred to as a NICRUT, this trust does not pay back any prior deficiencies. Very few people choose this option.
NET INCOME UNITRUST WITH DEFICIENCY MAKE-UP

Referred to as a NIMCRUT, this trust is like the one just above with a major exception. The trust pays the smaller of two amounts—the percentage you set in the trust document or the actual net income of the trust (which may be drafted to be only “ordinary income”, dividends, interest, rents, royalties, annuities, etc, or to include additionally realized net capital gains). In years when the trust pays less than the percentage you set in the document, a “deficiency” is written in the books of account. If in later years the trust earns more than the percentage you set in the document, the trustee must pay any back deficiency up to the amount of earnings in excess of the fixed percentage amount. Thus, prior years’ deficiencies may be able to be distributed with later years’ excess earnings.
FLIP UNITRUST (CHANGE OF METHODS UNITRUST)

Referred to as a FlipCRUT, this trust starts out as a net income with deficiency make-up (technically it can be without deficiency make-up, but I have rarely had anyone ask for that), generally to hold illiquid assets, such as real estate, that must be sold before the trust can earn money and make payments to the beneficiaries. Once the funding assets are sold or other stated “triggering event” happens, the trust transforms into a regular CRUT with mandatory yearly payments based on the percentage set in the document, as of January 1 the year following the sale of the illiquid assets. Other events can be the trigger for changing from a NIMCRUT to a CRUT, such as a pre-set retirement age written into the document, or a child or grandchild reaching a certain age, but any event used as the trigger must be beyond the control of the grantor or the trustee.

Describe Triggering Event for FlipCRUT here:

MOTIVATION QUESTION

So we better understand how to set up your trust and whether you have chosen the best form, please tell us a little about why you are interested in a charitable remainder trust.

First, we think it’s a great IDEA

I — It provides more income stream for your life or for other individuals. It may also best set for up to 20 years instead of lives of individuals. The type trust you choose will determine how, and how much, income is paid to you.
D — Deductions are available for the value of the remainder interest you have ultimately committed to charity. There are two types of deductions to understand.
- 1. Income Tax Charitable Deduction
  This deduction is available only for the value of the remainder interest to charity (not the entire value because you are retaining a valuable portion — the income interest). When you setup the trust and transfer assets to it, an actuarial value calculator determines as of that moment the value of the portion of the trust dedicated to charity. This must be at date of contribution 10% of the asset value.
- 2. Wealth Transfer Tax Deduction
  Wealth transfer taxes are estate & gift taxes as well as generationskipping tax if you include grandchildren or later generations. You may or may not be subject to these taxes depending upon the level of exemption in effect at any given time and the level of your wealth.
E — Exemptions from tax, something everyone likes. A charitable remainder trust is exempt from paying income tax (unless it operates a business or has indebted property causing unrelated business taxable income taxed at 100%!) So, your CRT can invest similarly to your IRA.
A — Avoidance of capital gains tax upon transfer of appreciated property into the trust. There are some exceptions, such as if you put your asset up for sale before putting it in the trust. Your trustee must arrange the sale out of the trust, not you, and the trustee receives the net proceeds after expenses of sale.

We think this is a “great IDEA” — in fact, it is IDEAL because it is;

L — Largely tax-financed through these tax benefits.

Now tell us what motivated you to consider a charitable remainder trust.

Here's the process

Understand your motivation and goals
Design a structure that works for you
Draft the document and review with you
Transfer the assets or see to it that such transfer is done
Set up operations and administration of the trust

This questionnaire:

This will be our guide to the process as we work together. Please answer the following questions as best you can, and do not be concerned about those you may not be able to answer just yet.

We will be spending considerable time together on these questions and any issues that may arise. We are committed to educating you on this type of trust so you know exactly what to expect. We want to make sure you understand the trust and its operations as well as how the assets you will transfer work with the trust.

To Start : WHO IS CREATING THIS TRUST? For one or two Settlors:

Name of Settlor #1:

Name of Settlor #2, if there is another Settlor

1. What is/are your legal name(s), first, middle and last, as you would like to use them in legal documents:

First

Middle name, or

Middle initial

No middle name or initial

Last

First

Middle name

Middle Initial

Last Name

What is/are your legal name(s), first, middle and last, as you would like to use them in legal documents:

First

Middle name, or

Middle initial

No middle name or initial

Last

First Name

Middle Name

Middle Initial

Last Name

Your Address

Phone

35. If real estate, include a copy of deed as filed on the last transfer to you. Location:

36. If intangible property (such as goodwill, copyrights, etc.), please describe:

37. If tangible personal property, please describe:

(Art, collections, classic cars, precious metals, etc.)

38. Generally, we make the transfer of the asset into the name of the trustee. If you prefer that we not make the transfer, who will transfer the asset to the CRT trustee?

39. Will we apply for EIN (Tax ID number for the trust)?

Yes

Who will apply?

40. If an attorney representing the charity (and not the donor(s)) prepares the trust document, will we, as attorneys for the donor(s), review the trust document for you?

Yes

41. Is there any other information we should have? List here:

42. Is there another professional advisor advising the donor(s)? List name, email and phone here:

Test Mode

CRT – Questionnaire

CHARITABLE REMAINDER TRUST QUESTIONNAIRE

CHARITABLE REMAINDER TRUST IN GENERAL

ANNUITY TRUST

UNITRUST — 4 VARIATIONS

STANDARD VERSION (SCRUT)

NET INCOME UNITRUST WITH DEFICIENCY MAKE-UP

NET INCOME WITHOUT DEFICIENCY MAKE-UP

NET INCOME UNITRUST WITH DEFICIENCY MAKE-UP

FLIP UNITRUST (CHANGE OF METHODS UNITRUST)

MOTIVATION QUESTION

Here's the process

This questionnaire:

TRUSTEE

TRUSTEE NAME

PROPERTY

BENEFICIARIES TO WHOM INCOME PAYMENTS WILL BE MADE?

HOW LONG WILL THE PAYOUT TO THE INCOME BENEFICIARY(IES) LAST?

Select one of the following 3 choices in one of these sections--10A, 10B, or 10C.

After these beneficiaries, are there others? For example, to husband and wife for life and then the survivor, and then to children for their lives. If so, please list:

IF YOU SELECTED LIFETIME PAYMENTS AND FILLED OUT 10A, SKIP NOW TO #11

IF YOU SELECTED A SET TERM OF YEARS AND FILLED OUT 10B, NOW SKIP TO #11

Payments for life or lives of individuals (such as Mom and Dad, followed by term of years for other individuals (such as children):

What if all named successor beneficiaries die/dissolve (if an entity) before the term of years expires?

If an entity, it will go to the charitable remainderman

TERMINATION OF THE PAYMENTS TO BENEFICIARIES

CHARITIES TO BE NAMED

14. If named now, what charities will be named?

TRUSTEE PROVISIONS

TRUSTEE FEES

CONCLUDING PROVISIONS

OTHER QUESTIONS ABOUT ASSETS CONTRIBUTED

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