Charitable Remainder Trusts: Support for You and Your Favorite Charities
Being a smart investor also includes proactive estate planning. When the time comes, we want to leave a legacy of support for our family and for our community. However, we don’t want our legacy to be unduly diminished by taxation.
What Is A Charitable Remainder Trust (CRT)?
This type of irrevocable trust allows for an individual to convert a highly appreciated investment, like stocks, into a source of income for the individual until which time that they pass away. Upon their passing, the remainder of funds in the trust is donated to the charity designated by the individual.
Why Set Up A CRT?
By setting up the CRT:
- The individual will receive a tax deduction upon the transfer of the investments to the trust
- The transferred investment will not be subject to inheritance or gift taxes upon the individual’s passing as it will no longer be included in the individual’s assets
- The trust will continue to provide an income for the individual until which time that they pass away
How Does It Work?
Generally, the first step of the CRT involves an individual transferring their stocks to an irrevocable trust. By doing this, the stocks are no longer considered part of the individual’s assets and therefore are not subject to being taxed. The individual receives a tax deduction by transferring the stocks into the trust. The trust will sell the stocks and reinvest the profit to provide income for the individual. The sale of the stocks is not subject to capital gains taxes. Upon the individual’s death, the remaining assets from the trust will go to the designated charity as selected by the individual.
By setting up a CRT, you create an ongoing stream of income without undue taxation while providing support for the charity of your choice.
Find out if a Charitable Remainder Trust is a smart choice for your portfolio and estate plans. Contact the business tort lawyers at Bennett, Weston, LaJone & Turner, P.C. for assistance.