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Your guide to terminating a charitable remainder trust

Complete terminations of charitable remainder trusts are appealing for two primary reasons. The donors no longer want or need the income, and/or they want to give to charity in the present or near term.

At some point during the trust term, the donor(s) may decide that they no longer need the trust payments. The donor may at that point transfer to charity their right to receive future trust payments. Depending on state law, the controlling language of the trust document, and the trustmaker's charitable inclinations, one possible solution is to create a Donor Advised Fund with American Endowment Foundation. The donor(s) can use this Fund to recommend grants immediately, and the family can stay involved in these meaningful assets for future grantmaking.

Sample Language

The following is sample language that the donor can send to the trustee of the charitable remainder trust to transfer his or her interest in the future payments to charity. It is advisable to have the donor consult with their own professional advisor.

December 31, 2004

Dear Trustee,

On February 15, 1997, I funded the Charles M. Jones Charitable Remainder Unitrust, a one-life unitrust in the amount of $500,000. Under the trust terms, I was to receive a quarterly unitrust payment of 6% of the Fair Market Value of the trust as determined every January 1.

As of December 31, 2004, I hereby irrevocably assign my entire interest in the Charles M. Jones Charitable Remainder Unitrust to the Jones Family Charitable Fund, a Donor Advised Fund of the American Endowment Foundation - a 501 (c)(3) public charity. In assigning my interest, I understand that I will no longer be entitled to or receive any further unitrust payments from the Charles M. Jones Charitable Remainder Unitrust.

Sincerely,

Charles Jones