Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, December 29, 2017

The Charms and Dangers of the Charitable Remainder Trust

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-29/03b94802-7fd1-4cba-b4c5-2873c1b2989e.pngThe 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.


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The suggestion in the Barron's article that a court found a remainder charity liable to pay an annuity to the individual settlor of a failed annuity trust seems unlikely absent some pretty remarkable additional facts. If this did happen, apparently the decision was not appealed, because I am finding nothing in the reported cases out of California.

Posted by: Russ Willis | Dec 31, 2017 6:25:18 PM

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