A Charitable Remainder Trust (CRT) is a wonderful giving option for those with highly appreciated assets (such as stock or real estate) who wish to make a substantial gift to Interface. It is an irrevocable trust, and it is highly recommended that you include your investment professional, attorney and tax advisor in discussions about this giving vehicle.

The Basics:

• There is an irrevocable transfer of property by the donor

• The donor retains a right to receive income from the trust or creates an income interest for other beneficiaries, or both

• The donor is entitled to a partial federal income tax charitable deduction in the year he or she funds the trust (or an estate tax charitable deduction for trusts funded at death)

• The donor incurs no immediate capital gain tax on the transfer to and subsequent sale by the trust of highly appreciated, long-term assets

• The donor chooses the trustee and, in most cases, can serve as trustee

• A charity can also be an income beneficiary as long as there is one non-charitable beneficiary

• The CRT can make distributions to charity from principal if the document permits it

• The donor chooses the type of payment (fluctuating or fixed)

• The donor chooses the amount of the payment (generally stated as a percentage of the initial gift amount).

• The trust term can be measured by 1) the life or lives of persons living when the trust is created, 2) by a term of years (not to exceed 20), or a combination of the two

• The trustee can tailor the investment strategy of the trust and the taxable character of the income to meet the unique needs of the donor (Note: The trustee is under a fiduciary obligation to look out for the interests of both the income beneficiary and the charity)

• The donor can choose the frequency and the timing of the payments (monthly, quarterly, semiannually or annually)

• The donor can choose one or more charitable organizations to share in the trust principal upon termination of the trust.

• The donor can reserve the right to change the charity.

• Provides a current income tax deduction. A gift to a CRT creates an income tax deduction for the donor (of the present value of the charitable gift). This current income tax deduction helps offset the donor’s taxable income.

• Defers capital gains taxes. Because a CRT is tax-exempt, capital gains tax liability is deferred when the gifted appreciated assets are sold by the CRT. This allows the CRT to convert the full value of the asset into an investment that can provide a lifetime income for you and your spouse.

• Reduces or eliminates estate taxes. Since the donated assets generate a charitable estate tax deduction at the death of the income beneficiary, estate taxes may be decreased or eliminated. These changes may affect charitable and estate planning goals. Therefore, donors should consider the tax benefits very carefully and consult with a tax adviser before transferring assets to a CRT.

• Provides an income stream, often for life. When assets are donated to a CRT and sold, the money generated from the sale may be placed in an income-producing investment. The income is then distributed according to the trust provisions. Because there have been no capital gains taxes paid, the amount invested may be greater than if the assets had been sold outside of a CRT and had been subject to capital gains or income taxes.

• Benefits Interface. When the trust ends, the assets remaining in the trust pass to Los Padres ForestWatch, ensuring that you will leave a significant legacy.

A charitable remainder annuity trust (CRAT) provides a fixed dollar amount with each payment to the beneficiary. This amount corresponds to a percentage of the original investment paid out annually.

For example, a $100,000 charitable remainder annuity trust might pay out 7.5% annually. In this situation, the beneficiary would receive $7,500 each year for the lifetime of the beneficiary or a fixed period of years. The $7,500 may be paid in one sum each year, or in several installments throughout the year.

The amount paid annually to the beneficiary of a charitable remainder unitrust (CRUT) is a fixed percentage of the fair market value of the assets, as determined each year.

For example, a charitable remainder unitrust might pay out 5.5% annually. If the assets were valued at $100,000, the beneficiary would receive $5,500 that year (5.5% of

$100,000). If the assets were valued at $125,000 the next year, the beneficiary would receive $6,875 (5.5% of $125,000).

As with a charitable remainder annuity trust, the payments may be made in one lump sum each year, or in several installments throughout the year.