Last time, this column was about Living Trusts. This time around, we'll concentrate on remainder trusts, which give trustees an opportunity to earn income and eventually give assets to their favorite charity when life has ended. This kind of trust is growing in popularity, especially among folks with significant assets who want to use their savings to produce a lifetime income stream, avoid or at least minimize capital gains taxes and, at the same time, take a bite out of their income taxes.

As a member of the board of directors for the Delta Memorial Hospital Foundation (DMHF), I recently attended a symposium designed to educate Sutter Health foundation members on the advantages of "Planned Giving," the charitable action that many seniors can feel very good about. Even folks with heirs can think about a Remainder Trust if their assets are substantial enough to provide assets for their children and a charity.

The assets we're talking about can be real estate as well as money in savings, stocks and bonds or some kind of retirement account. During the symposium, the San Francisco law firm of Silk, Adler & Colvin gave the following somewhat outdated examples to illustrate how this kind of trust can benefit a donor.

Suppose a man and his wife, both 75, own a piece of property, free and clear, worth $500,000. They establish a trust benefiting, say, the DMHF that helps support the needs of Sutter Delta Medical Center, our only local hospital. When the trust sells the property, it generates $33,250 in income (seven percent of the trust value) for the donors for the rest of their lives. Capital gains tax of $93,000 is avoided, a charitable income tax deduction of $193,000 is generated, gift and estate tax are avoided and the entire trust value (minus about five percent in costs) goes to the trust beneficiary when the last survivor passes away.

Charitable gift annuities are another way of benefiting a charity while earning income, most of which is tax free. An example could be a woman who has $50,000 in a CD. She wants to earn more income than the banks are willing to pay and makes a contract with Sutter Health. Her contribution will earn an annuity of 7.4 percent ($3,700) for the rest of her life, $2,400 of which is tax free. She also gets an income tax deduction of $23,750.

There are a number of pay-out formulas for income generated by a Charitable Remainder Trust, and a donor can leave an IRA to charity without paying estate taxes or income tax on the gift. The IRS has been generous in its treatment of charitable trusts, recognizing the benefits to the community of charitable planned giving.