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Michael A. Milazzo, CLU, ChFC
Registered Principal
The Meridian Financial Company
3350 Club Villas Dr SE, Unit #1303
Southport, NC 28461
Phone: 631-979-4223
Fax: 910-854-0002
Email: meridian@ae.cadaretgrant.com
Website: www.merfinco.com
May/June 2024
Split Interest Trusts: The Basics
Split interest trusts are created to provide for both charitable and non-charitable beneficiaries. Donors can support an organization or a cause while still arranging for themselves or their loved ones to benefit from the assets placed in the trust.
How It Works
The trust is called a split interest trust because the assets ultimately benefit both a charitable organization and a named beneficiary. The donor transfers assets into the trust and receives a charitable contribution tax deduction in the same year. Transferred assets can include cash, securities, or real estate. Once assets are placed in the trust, the donor no longer has control of them. A trustee manages the assets according to the agreement that established the trust. The IRS generally recognizes three types of split interest trusts.Charitable Remainder Trust
The most common form is a charitable remainder trust (CRT). The donor contributes assets to the trust, which then pays income to the donor or other beneficiary(ies) for a specified time — often, the donor’s lifetime. Any assets remaining in the trust after the specified period are distributed to one or more charitable organizations.Charitable Lead Trust
A charitable lead trust (CLT) is designed to support charitable causes while still benefiting the donor’s heirs. The donor contributes assets to the trust, which then pays income to the chosen charity(ies) for a specified time. At the end of that time, the remaining assets are distributed to the donor’s heirs or other beneficiaries.Pooled Income Fund
A pooled income fund (PIF) is established and maintained by the qualified nonprofit organization that benefits from it. The fund receives irrevocable contributions from one or more donors, which may be individuals, families or a corporation. The funds are invested and donors receive distributions from the fund’s income, making them beneficiaries of the trust. When donors die, their share of the fund is distributed to the charity as a donation.Is It for You?
Keep in mind that you no longer have control of assets placed in a trust. Your financial professional can discuss the pros and cons.CONTACT US
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Securities and Advisory Services offered through Cadaret, Grant & Co, Inc, a Registered Investment Advisor and Member FINRA/SIPC. The Meridian Financial Company and Cadaret, Grant & Co., Inc. are separate entities. I am registered to sell Securities in the following States: NY, NJ, PA, NC, FL, ID.
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