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What is the role of my advisor and SEI Private Trust Company (SPTC)? Your advisor can work with you to: • Integrate your CRT with your other estate and financial plans • Help determine which type of CRT best meets your needs • Recommend the most appropriate investments to fund the trust SPTC can serve as a discretionary trustee, which includes investment authority and performing all of the required administrative and recordkeeping activities and tax preparation. SPTC can also serve as trustee or as your trustee's agent and perform administrative and recordkeeping activities and tax preparation. In any case, SPTC will work closely with your advisor to administer and, if applicable, manage the trust. SPTC case study Charitable remainder trust (CRT) Mr. and Mrs. Jackson are in their mid-60s and are planning for the next chapter of their lives. Mr. Jackson has worked for the same company for 25 years and has accumulated a number of shares with a low cost basis. The Jacksons will be relying on their financial assets for part of their cash flow needs going forward. They're charitably inclined and are also thinking about their legacy. The company stock is currently valued at $1 million with a cost basis of $300,000. The Jacksons want to reduce their exposure to a single company, but are concerned about taxes. Together, the Jacksons and their advisor took a look at their financial situation, goals, and objectives. Their advisor recommended a $500,000 charitable remainder trust as part of the financial plan. They considered a donor-advised fund, but because the Jacksons were looking for cash flow, their advisor didn't recommend it; a donor-advised fund would provide only a tax deduction. By donating the $500,000 in stock to a CRT, the Jacksons bypassed a gain of $350,000.2 This saved them $65,800 in taxes at an 18.8% long-term capital gain rate. Also, the Jacksons generated a charitable income tax deduction of $124,350, which could save them $43,523 at a 35% tax rate.3 The advisor pointed out that the gift to the CRT is irrevocable. The initial tax-favored annuity payment (6.5%) from the CRT is $32,500, which covers over 50% of the Jacksons' projected cash flow needs. The CRT will continue to pay the Jacksons as long as one of them is alive. The rest of the needed cash flow will come from a pension, other financial asset accounts, and Social Security. The minimum payout rate for a CRT is 5%, but can be substantially higher, depending on how the payments are structured—in this case, joint life expectancy. Keep in mind, as the CRT payout rate is increased, the charitable deduction will go down, and vice versa. Tax benefits review: Tax savings on stock sale: $65,800 Charitable income tax deduction: $124,350 Consider the disadvantages of a CRT too: • Contributions to the CRT cannot be returned to the grantor; it's irrevocable. • Terms of the trade are unchangeable (though assets and charitable beneficiaries may change, depending on how the CRT was established). • Assets that pass to charity do not pass to heirs. • Charitable trusts are subject to specific IRS rules. 2 The gain was derived by dividing the total stock $1 million and the total cost basis ($300,000) in half to represent the amount contributed to the CRT. 3 The charitable income deduction was calculated using Crescendo Planning Software Version 2022.1. The planning software does not consider state or local taxes.

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