Friday, December 29, 2017
The charitable remainder trust (CRT) has long been a popular planning vehicle for individuals interested in leaving something to charity. The CRT helps reduce the cost of giving and can also serve as a tax shield for highly-appreciated assets. A common example, elderly couples can utilize the CRT to sell their homes, downsize, and avoid capital-gains taxes. While these vehicles can be extremely useful, some variants have the potential to blow up in an investor’s face. Violations of rules restricting payouts or requiring certain levels of assets to be held in the trust can lead to extremely severe tax consequences to the settlor. For this reason, it is important to discuss the different variations and drawbacks of CRTs with your financial planner or lawyer.
See Matt Miller, The Charms and Dangers of the Charitable Remainder Trust, Barron’s, September 22, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.