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Subject:  Charitable Remainder Trust Date:  9/17/1998  10:52 PM
Author:  gapfan Number:  11 of 21395

I just want to mention that after I retired I wanted to convert some stocks into a better income stream. The dividends on Gap, Inc. stock were less than 1% of their value. For a more secure income stream for myself and my wife, I looked at charitable remainder funds, unitrusts, etc. A significant incentive was the avoidance of capital gains taxes. (There are all sorts of options that can still leave inheritance for children, etc.)

I started with a "major" charity, set up a unitrust with a 7 3/4% payout rate based on Jan 1st valuations. I ran into major problems on that one. When Fidelity Investments came out with a Charitable Remainder Trust, I checked it out to my satisfaction and set that up, followed by joining the pooled income fund portion when that was added. I am very satisfied with their program, especially since I am familiar with some of the funds that they invest in.

The Charitable Remainder Trust permits me to make gifts to charitable groups (IRS defined) with $250 minimum gifts but serves me well to support charities I specify. (I happen to have the forms on my desk right now for my current list.) Where I choose less support I make less frequent gifts. I funded this ($10K min.) with appreciated stock. When I funded it, I got a charitable deductions for tax purposes of 100% of the market value of the stock.

A pooled income fund within this trust pays income from the dividends and interest that fund collects from its investments, currently about 5+%, for our two lifetimes. After that, the fund is transfered to the Trust which is dispersed by whoever we appoint as a person to direct that dispersing or as otherwise directed. The point is that we have control over where it is dispersed (a "self directed" setup).

I think it is a great way to guarantee an income stream, participate in stock market growth, avoid long term capital gains, and get a charitable deduction at the same time, as well as moving assets out of an estate. By yearly contributions I simplify tax carryovers of charitable gifts to <30% of AGI.

I have also set up funds for relatives, taking advantage of the $10,000 per year per person gift provision. These funds eventually feed back into our Trust. The "gifts" are the "non-charitable" part of the contribution.

Good luck. Hope this if of use to some of you!!

gapfan :-)
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