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My husband and I had to deal with canceled debt from a Deed in Lieu of Foreclosure on a second home with our 2012 taxes. We never had to deal with this type of tax experience and needless to say, we were fearful. Owing taxes on possible additional income was stressful. We searched for CPA’s as well as info about DILs and how Insolvency worked. When we came across Gary’s website, we were impressed. We found his website 8 months prior to tax season. We kept it as a “Favorite” as we knew we would need to contact him for assistance. When it was time to get a CPA, we called Gary. We felt relieved that we actually had someone that not only understood our concerns but was an expert in this area. He walked us through the process and all the time telling us not to worry. When our taxes were completed, you cannot imagine the relief we had when we actually were able to get a refund.

Gary is a dedicated professional and attentive to his clients. We love the virtual office as it is convenient during tax time and he’s fees were fair and affordable when you consider the depth of work accomplished on our taxes!

We’ve already started recommending Gary to others. We are so blessed and grateful for all that Gary did to assist with our taxes.


Patty and Tim, Fredericksburg, VA

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CPA discusses Charitable Remainder Trusts and Charitable Lead Trusts | 2012

A Wilmington, NC CPA discusses split interest charitable Trusts

We're a CPA firm with a virtual office to accomodate long distance clients. For a free phone consult call (910) 399-2705.

With charitable giving becoming popular as part of estate and/or retirement planning, here is an overview of the most popular charitable/retirement (Estate) combination Trusts. I think most of us want to know our retirement is appropriately funded before supporting a charitable cause.

“Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) are mirror images of each other.”
-Gary Bode, Wilmington NC CPA

Both are irrevocable, split interest Trusts of less than 20 years duration. The split interests are a) some charitable institution and b) the donor (or the donor’s heirs). Both CRTs and CLTs come in two distribution variations: a fixed dollar annuity, and, a fixed percentage of the Trust’s fair market value, as primary pay out amounts. CRTs pay a fixed annuity amount (CRAT), or fixed percentage of the trust (CRUT), to the donor first, with the remainder going to charity. CLTs pay a fixed annuity amount (CLAT), or fixed percentage of the trust (CLUT), to the charity first, with the remainder going to the donor. A CRAT would be appropriate when guaranteed amounts are needed for retirement, or desired as bequests to heirs.

Potential tax benefits of CRTs and CLTs include:

  • They are tax exempt at the Trust level.
  • The donor receives income and gift tax deductions for the year of actual contribution.
  • Low basis assets that have appreciated, like real estate that has increased in value, can be transferred into them and then sold without incurring any income tax.

Additional wording in IRS Revenue Procedure 2007-45, for CLTs, allows for increasing the annual annuity amount, or the percentage of the trust, to the charitable institution over the term of the trust. So the IPCLAT is an Increasing Payment Charitable Lead Annuity Trust.  An article in the July 2010 Journal of Accountancy suggests an application of the IPCLAT is to allow growth of principal in the early years of the trust, with hopes of the economy improving.

The entire acronym jungle of split interest charitable trusts has one obvious concern for anyone considering them as a retirement vehicle: make sure your personal needs for retirement will be met before funding charitable concerns.

Feel free to call us for a free phone consult at (910) 399-2705.

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