A Charitable Remainder Trust is a trust where the property or money is donated to a charity, but you continue to use the property and/or receive income from it while living. Your beneficiaries also receive the income for a period of time and then the charity receives the principal after a specified period of time.
A Charitable Remainder Trust offers a number of benefits to the donor, the donor's family, and the donor's favorite charity. They include the following:
Reduce or eliminate estate taxes
Provide an immediate income tax deduction
Allow for tax-free diversification of assets
Avoid capital gains tax
Increase lifetime income
Benefit a charity of your choice
You avoid any capital gains tax on the donated assets, and you also get an income tax deduction. Also, the asset is removed from the estate, reducing subsequent estate taxes. A Charitable Remainder Trust comes in three types: charitable remainder annuity trust (which pays a fixed dollar amount annually), a charitable remainder unitrust (which pays a fixed percentage of the trust's value annually), and a charitable pooled income fund (which is set up by the charity, enabling many donors to contribute).
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