Examples of Charitable Remainder Trusts

Jack and Joanna Hillier (both 65 years of age) own a summer cottage in Michigan. Although they enjoy having the ability to share the cottage with family and friends and have a place to vacation, the cottage maintenance is expensive, time-consuming, and often a hassle. The cottage has a fair market value of $500,000 and is completely debt-free.

The Hilliers have been thinking about selling the cottage, taking the profit, and avoiding all the typical maintenance problems. However, the Hilliers' basis in the cottage is $150,000 and they would incur significant capital gains taxes in the sale.

Here’s how Jack and Joanna can transform their cottage into a lifetime income stream for them and make a significant gift to Wheaton College.