| Frequently
Asked Questions If a trust agreement is established as irrevocable,
it means that it can't be revoked (broken) except under unusual circumstances.
Why would anyone want an irrevocable trust?  There
are always specific reasons for making an irrevocable trust agreement. Perhaps
it involves a family business where some of the family members are getting on
in years and the family wants to make certain that management continues to run
smoothly even if hindrances, such as senility, enter the picture. Many
times the reasons for an irrevocable trust involve estate and/or income tax avoidance.
In order to be successful in such avoidance, the trustor must not have any direct
or indirect power or control over the trust property or income. The regulations
on this subject, set out in the Internal Revenue Code, must be carefully followed.
What is the difference between a charitable remainder unitrust and
a charitable remainder annuity trust? The major difference is
in the valuation of the assets of the trust, which establishes part of the calculation
for the determination of the amount of income received by the income beneficiary(-ies).
The annuity assets are valued at the time the assets are placed in the trust and
are never revalued. Annual payments remain the same, whether the assets appreciate
(increase in value) or decline (lose value). The assets in the unitrust
are revalued annually. If the trust assets appreciate, the payment to the income
beneficiary(-ies) will increase. If the trust assets depreciate, the payment will
decrease. What happens to my assets in a trust for a charity if the
charity goes out of business before the expiration of the trust? Your
trustee is authorized to name a substitute, if that is the sole charity. Should
I name a charity as trustee of my charitable remainder trust? This
is often done if the organization is qualified to so act under local law. The
organization's representatives can satisfy you in that regard. Often they will
serve without fee, which is an additional incentive.  How
often should I update my will or trust?
These documents should be
updated any time your financial or your family circumstances change. As laws vary
from state to state, if you move you should have an attorney licensed in and familiar
with the new state's laws review your will or trust agreement. It is always wise,
even if there are not any significant changes in your circumstances, to periodically
review these important documents. Can I use my insurance to benefit
charitable organizations? Yes. This is an area overlooked by
many. You can name one or more charities as alternate or as primary beneficiary.
Furthermore, if you no longer need the policy proceeds in your estate for use
now, you can transfer ownership of the policy to the charity or charities. If
the policy has cash loan value, the charity can draw this out and use it. In this
case, you not only receive a charitable gift deduction, but any additional premiums
you pay are tax deductible for you now. And, on your death, the charity receives
the balance of the policy proceeds and none of it is included in your estate for
tax purposes. How can I fund a charitable gift annuity and how is
my income calculated? The usual funding sources for a charitable
gift annuity are cash and marketable securities. There can be tax benefits associated
with the gift of appreciated securities (the current market value exceeds the
cost or basis value). As a gift annuity is considered partially a gift and partially
an annuity, part of the gift avoids capital gain tax entirely. Real estate and
other marketable assets may also be used, but in many cases acceptance of these
kinds of assets are often on a case-by-case basis. Generally, the charity will
convert the assets to cash to fund the annuity. The income provided
you by the annuity is determined by your age and the age of any additional beneficiary
and is calculated using tables established and filed with regulatory agencies
under which the charity operates its annuity program. 
Can
I set up a charitable gift annuity and delay the start of the income until I will
more likely need it, such as at my retirement, when my income is lower? Yes,
the flexibility associated with establishing charitable gift annuities makes them
a popular and effective retirement planning vehicle. Using a deferred gift annuity,
the annuity earnings accumulate on a tax-deferred basis. Thus the deferred payment
annuity accomplishes several things. First, the donor receives a tax deduction
in the year the annuity is established,
which is usually when the donor
is in a higher tax bracket. Secondly, the gift to the charity becomes larger as
the deferred earnings increase the annuity's principal. Finally, since the deferred
payment annuity grows in size while income is deferred, the ultimate income will
be more per year. | 
