Skip Jacobs

In investment circles, a bond is debt instrument issued by governments and corporations whereby the investor(debt holder) will receive periodic interest payments(usually every 6 months) plus the principle(amount borrowed by govt or corp) at the end of the term. Terms are typically 10-30yrs. Notes are more than 1 yr up to 10yrs.

Bonds may be purchased at face value, at a discount, or at a premium. The interest rate on the bond vs the market rate determines the price at which the bond is purchased.

Trusts avoid taxes primarily through charitable means. One of the most commonly used trusts is called the Charitable Remainder Trust. It gives you these tax advantages

1. Long term appreciated property(held for more than a year) placed in a trust avoids capital gains tax when sold in the trust.

2. When the property is placed in the trust , the donor gets an upfront tax deduction based upon the fair market value of the property at that time.

The asset grows tax free in the trust

As with any type tax deduction, there are other qualifiers and limitations which vary depending on the type property being placed in the trust.

The payments from the charity are backed by the entire assets of said charity. The payments can be made monthly, quarterly or annually. They can be made for a set number of years, or for the life of both spouses-obviously payments made for life are less than for a set number of years. You can have payments begin immediately(immediate annuity), or they can be deferred for over a year(deferred annuity). Please note that some charities may not be willing to defer payments for a long period of time.