Charitable Remainder Trusts: How To Help Others and Get A Break On Your Taxes In The Process

Legal Article

Charitable Remainder Trusts: How To Help Others and Get A Break On Your Taxes In The Process

Charitable Remainder Trusts

A Charitable Remainder Trust—also known as a “CRT”—is an irrevocable trust created under the authority of Internal Revenue Code § 664 (“Code”). A Charitable Remainder Trust is a trust that lets you donate to charity while giving you and your heirs big tax savings in the process. Typically, one will fund a CRT with highly appreciated long term assets. These assets include real estate or stocks that create an income stream for the beneficiaries with a remainder of the trust’s assets donated to one or more charities.

One of the major benefits of a CRT is the potential for the grantor to take an immediate charitable deduction against the income produced by the trust for the value of the trust assets that are to pass to the qualified charity (what is known as the remainder beneficiary. Secondly, a CRUT is exempt from federal tax on the income from investments it holds. Third, contributions to a charitable remainder unitrust made pursuant to a will can provide for an estate tax deduction. 26 U.S. Code Section 664 provides the requirements for Charitable Remainder Trusts.

Key characteristics

  • A potential immediate (partial) tax deduction, based on the value of the remainder gift to charity
  • May eliminate capital gains tax for gifts of long-term appreciated securities
  • Accepts many types of assets
  • Income may be for life or for a fixed term of no more than 20 years
  • Requires setup and ongoing maintenance costs

Additionally, to ensure that the charitable organizations you care about receive your funds, establishing a charitable remainder trust is crucial. Furthermore, this trust will pass on key tax benefits so that your beneficiaries will receive a maximum amount of assets.

Contact our DC Law Office for More Information

Finally, for more information regarding estate planning, please contact Antonoplos & Associates at 202-803-5676. You can also directly schedule a consultation with one of our attorneys.