Charitable Remainder Trusts
Charitable Remainder Trusts
Charitable remainder trusts (CRTs) are designed around a donor placing assets such as cash, stocks, bonds, or real estate into a trust, which will pay income to the donor or their named beneficiary for either a set period of time or until the donor’s death. Once this income period ends, the assets in the trust are then distributed to the charitable organization named as the beneficiary in the trust. CRTs can serve as effective tax planning tools as CRTs allow donors to place high-value assets into the trust, which reduces the size of the donor’s estate. Additionally, items placed into the CRT also allow the donor to avoid paying capital gains taxes when they are sold by the trust beneficiary. Additionally, donors can deduct a portion of the donated assets’ value from their income taxes for the year that these assets are added to the CRT.
Flexibility in How Income is Distributed
The two main types of charitable remainder trusts (CRTs) are charitable remainder annuity trusts and charitable remainder unitrusts. Charitable remainder annuity trusts pay a fixed dollar amount to the donor annually, regardless of investment performance. In contrast, charitable remainder unitrusts distribute a fixed percentage of the trust’s assets to the donor or named beneficiaries, which are revalued each year, allowing for potential income growth if investments perform well.
Establishing a charitable remainder trust can be mutually beneficial for both the donor and the charitable beneficiary. However, given the legal complexities involved, it’s important for donors to work with an experienced estate planning attorney and trust management firm like Altruist™ when setting up a charitable remainder trust.
Ensuring Your Assets Benefit the Causes You Care About
Altruist’s™ expert and caring trust managers have helped countless families navigate the development of impactful charitable remainder trusts. Allow us to help you identify the best way to support your favorite causes and ensure your wishes for your estate are fulfilled.