A Charitable Remainder Trust is set up in order to achieve both income and estate tax benefits for a donor and the donor’s beneficiaries. A properly established charitable remainder trust is eligible for a charitable estate-tax deduction on the decedent's estate tax return. However, if a charitable remainder trust is generating income that is reinvested by the clients, the projected value of those additional investments needs to be taken into account in order to have an accurate estate projection.

  

The donor names individuals (which may include the donor) to receive income from the trust for life, with the principal remaining at the donor's death going to the designated charity. The donor receives an income tax deduction when property is transferred to the trust, and the size of the estate is reduced by a charitable deduction (in the amount of property transferred) at the donor’s death. Naturally, there are restrictions placed on the non-charitable beneficiary's rights to income and the invasion of the trust principal. Only in this way can the designated charity be assured that it will eventually receive the property for which the donor is taking income tax deductions. 

 

Two of the most utilized Charitable Remainder Trusts are the Charitable Remainder Annuity Trust and the Charitable Remainder Unitrust.

Charitable Remainder Unitrust | Charitable Remainder Annuity Trust | Charitable Remainder Trust Calculator | Charitable Remainder Trust (Illustration) | Advantages of a Charitable Remainder Trust

 

 

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