What is a Charitable Remainder Trust?

A Charitable Remainder Trust is a type of instrument that allows a donor to transfer assets to a trust, receive income for a specified period, and then have the remaining assets go to a charitable cause. It is a tax-exempt entity that offers a way to support charitable causes while also providing income to the donor or other beneficiaries.

The trust splits the ownership of the donated asset into two interests.

An income interest, for the donor or other beneficiaries, and a remainder interest for the charity.

The Income Stream

Upon the end of the trusts’ term, which can be a fixed period or the lifetime of the beneficiaries, remaining assets go to the designated charity choice of the owner.

Charitable Remainder Trusts offer several tax advantages, including a charitable income tax deduction for the present value of the remainder interest portion, avoidance of capital gains taxes on appreciated assets transferred to the trust, and zero tax for the trust itself.

If this is of interest, certainly contact an estate planning attorney to create the trust documents. Please consider including me in the conversation so that the best possible choices can be made.

-Zac