Charitable Remainder Trusts
Lifetime Income
How do I grow my assets tax free while receiving annual cash distributions?
Exchange shares for an Exchange Fund interest and then contribute that interest into a Charitable Remainder Trust. Your trust interest will appreciate tax-free, while you receive cash distributions each year. Plus, you get a big tax deduction when you create the trust.
Grow Assets Tax-Free
Your Exchange Fund interest will appreciate tax-free in your trust. Over time, avoiding capital gains tax on your investments can increase your wealth dramatically.
Receive Cash Distributions
Receive annual cash distributions over your lifetime by redeeming part of your Exchange Fund interest in the trust and distributing the proceeds to yourself.
Reduce Your Taxes
Receive a tax write-off in the year you create the trust equal to ~10% of the value of the Exchange Fund interest you contribute to your trust.
Talk to a Collective Liquidity representative
Our representative is happy to answer all your questions.
What is a Charitable Remainder Trust?
A Charitable Remainder Trust is an account into which you transfer assets, including fund interests, tax-free. The trust then pays you (or your designee) an income stream for the life of the trust. You can choose the term of the trust or have the term be your lifetime. When the trust ends, the remaining assets are distributed to the charities you select.
Assets in the trust can be sold and reinvested on a tax-free basis - effectively compounding those tax savings - over the life of the trust. This creates significantly more wealth over time compared to just selling an asset, paying tax on your gain and reinvesting what's leftover. You also get a tax deduction, usually about 10% of the value of the contributed assets, in the year you created the trust.
Unicorn shareholders can create a Charitable Remainder trust by exchanging some of their shares for a Collective Exchange Fund partnership interest and then contributing that interest into their trust:
- The exchange and contribution to the trust are both tax-free.
- You receive an immediate tax write off equal to the value of the exchanged shares.
- You can redeem a portion of your fund interest for cash and reinvest it tax-free or receive it in a distribution.
Exchange your unicorn shares
Exchange your stock tax-free for a partnership interest of equal value in the Collective Exchange Fund, our diversified portfolio of leading unicorns like yours
Example
If you hold $500,000 worth of shares in one of the companies eligible for exchange, you exchange your shares for a $500,000 partnership interest in the fund tax-free. This diversifies your holdings and reduces your risk.
Create your Trust
Form your trust and customize its terms to meet your needs - then contribute your Exchange Fund interest into your trust and earn a tax deduction equal to ~10% of the value of the fund interest
Example
Form your Charitable Remainder Trust, customizing its parameters to fit your needs and contribute your $500,000 partnership interest into it. Take an immediate ~$50,000 tax deduction.
Take your distributions
Each year after the first, redeem some of your Exchange Fund partnership interest for cash tax free - use the cash to fund new investments tax-free and/or take cash distributions
Example
After the first year, your partnership interest has appreciated and is now worth $620,000. Redeem $40,000 of the interest for cash and take that cash as a distribution. The following year the partnership interest is now worth $700,000 - you elect to redeem $60,000, taking $20,000 in a distribution and reinvesting the other $40,000 tax-free into new assets to further diversify.
Charitable Remainder Trust Estimator
Estimates
Schedule of Distributions
Estimates
Distribution Amount by Year
The information contained herein does not constitute a recommendation or advice by Collective Liquidity. You should consult your own tax, legal, accounting, financial or other advisers about the information discussed herein based on your specific risk profile and financial situation, including the suitability of an investment in the Fund, with Collective Liquidity, or any product offered or managed by Collective Liquidity.
The assumed 12.50% average return on the Exchange Fund is hypothetical. Hypothetical performance results have inherent limitations. No representation or guarantee is being made that the Exchange Fund will achieve any particular results. There are frequently differences between hypothetical fund results and the actual results subsequently achieved. The assumed average return on the fund is not necessarily indicative of future performance.