Pooled Income Fund Trust

Pooled Income Fund Trust

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Pooled Income Fund Trust

Pooled Income Fund Trust definition:  Pooled income fund trusts are deductible; therefore reducing income and estate taxes. A pooled income fund is set up by a charitable organization to receive contributions from the public. The contributions are pooled and invested together with donors receiving lifetime income based on net investment income for the fund. The donor’s income portion is based on the size of their contribution to the overall size of the fund.  When the donor dies, their contribution is removed from the fund and can be used by the charity for its charitable purposes. The present value of the charity’s remainder interest (fair market value minus donor’s retained value) is tax deductible when the trust is established.  Highly appreciated assets may be transferred to a pooled income fund trust without paying capital gains tax. For example, real estate or stock purchased at a low basis which has appreciated in value can be sold or transferred to the pooled income fund trust without paying capital gains tax.

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