Ever wondered how you can save money and give generously at the same time? A Charitable Remainder Trust (CRT) is an excellent way to contribute to your favorite charity while reducing your taxable income. A CRT is tax-exempt and irrevocable, which means the trust cannot be modified once it has been finalized. It involves donating your assets into the trust and having it generate income for a certain period of time, and then transferring the remaining property to your chosen charity.
How It Works
When you set up a CRT, you will first transfer property to the trust. The transfer will include any property you want to donate to an approved charity, such as cash, stocks, real estate, and private business interests. The charity will manage or invest the property so it generates income for you. The beneficiaries (which could be you or someone else you name in the trust) will receive this income for a specified period of time. Once that period ends or the beneficiaries pass away, the remaining property will go to the charity.
Why Should You Use a Charitable Remainder Trust?
- You can retain the value of substantially long-term appreciated assets, including property that does not produce income, by contributing them to the CRT. The trust will preserve the full fair market value of your assets.
- The charity transforms your assets into property that will produce income for you. Since charities don’t pay capital gains tax, the charity can sell your property and keep your tax-free proceeds in the trust.
- You will be eligible for an income tax deduction for the value of your charitable donation.
- When the payment period ends or the beneficiaries pass away, the trust property goes directly to the charity. Since the property won’t be in your estate, it won’t be subject to federal estate tax.
- Because your CRT investment is tax-exempt, it’s a great way to diversify your assets.
- After all is said and done, you are giving to a worthy cause.
If you’re looking for a steady stream of income and an immediate charitable deduction, a Charitable Remainder Trust can be the perfect solution. It can be a great advantage in retirement, estate planning, and tax management matters. Speak with the trustworthy attorneys at Estate & Long Term Care Group to set up a Charitable Remainder Trust that meets your individual needs. We would be happy to help you reach your financial and philanthropic goals.
Written by ELTC Law Group
