Monday, May 26, 2014
A charitable remainder trust (CRT) can be an effective estate planning tool if you have significant assets you would like to leave to charity. The CRT is a form of an irrevocable trust and serves multiple purposes. It is especially useful for a charitable minded individual, it allows the individual to receive the income benefit during their lifetime, and affords a tax break in the year the gift was made.
As an irrevocable trust, once the asset is gifted, it cannot be taken back and will not be available to you or your heirs after gifting. Thus, it becomes important to plan carefully before making the decision to use a CRT.
The advantages of using a CRT are numerous. For example, the asset you gift to the CRT will stay in trust for a term, and you will receive a tax deduction for the remainder value of the asset. Moreover, once the asset is in the trust, you may sell it and not realize an capital gains on the sale.
See Charitable Remainder Trusts: An Overview, New Focus Financial Group, May 15, 2014.