Should I Consider a Charitable Remainder Trust?

From the Desk of Charlie McCullough:

Charlie McCulloughYou might remember that in one of my earliest blog posts, I introduced you to my family, including my lovely wife Lisa, our daughter Ava, and my children from my first marriage, Sheldon and Callie. In addition, my parents, Donald and Janice also live with us. It is a full and very busy life to say the least.

I have noticed in recent days that my parents are starting to slow down a bit. They used to be very active and offered their services as volunteers in several charitable organizations, including one of their favorite, the Marathon County Humane Society. My parents have always been very fond of animals, so when they retired, they decided that this would be a wonderful way to get involved in the community and give back. These days, they are just not as mobile as they once were, and they are not able to be involved as much as they would like.

The realization that my parents are getting older and won’t be around forever led me to have a serious heart-to-heart conversation with my advisor at Financial Fiduciaries last week. “How can my parents continue to give back to the Humane Society and other organizations they love?” I thought that because they were not able to drive anymore, they would not have any options. However, my financial advisor suggested a Charitable Remainder Trust (CRT). Genius! If my parents could not give of their time, at least they could provide a bit of income to the Humane Society’s cause after they had passed.

As I thought more about it, I started to have some questions. To this point, my parents have enjoyed a comfortable retirement, but I did not think it was wise to tie up their money in something that they would never be able to utilize. What if they had health issues that required additional funds? Additionally, my parents were concerned that they would not be able to leave anything for Lisa and me if it was endowed to the Humane Society.

I am so glad that my advisor at Financial Fiduciaries gave me a bit more background on how the CRT worked. This unique investment tool would actually provide my parents income for the rest of their lives and could also provide income for Lisa and I for the rest of our lives and finally be endowed to the Humane Society once we passed. The best part of a CRT is that if my parents fund it with appreciated assets they do not pay capital gains on the investments transferred to the trust. Additionally, mom and dad are also able to claim a charitable tax deduction because of this trust, and best of all, they guarantee income for themselves, and eventually Lisa and I, for the rest of all of our lives.

When my advisor from Financial Fiduciaries explained the benefits of a CRT, it made perfect sense. And, since they are fee-only, I know that the advice they are giving me is in my best interest (and my parent’s best interest as well!)

Charlie and Lisa McCullough are fictitious characters who are utilized to illustrate situations in which people might find themselves.  Their family and friends are also fictitious.  While their stories are inspired by actual situations encountered by Financial Fiduciaries professionals working with clients and prospective clients, they are not intended to provide any specific investment advice.  Each situation is different and any general advice provided in the context of these articles may not be suitable for all individuals.  Always consult a professional for advice specific to your situation.




About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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