Charitable Secrets: Lifetime Income With Charitable Remainder Trusts

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What is a Charitable Remainder Trust?

A charitable remainder trust (CRT) is an irrevocable trust that generates a potential income stream for you, as the donor to the CRT, or other beneficiaries, with the remainder of the donated assets going to your favorite charity or charities.

How Do They Work?

A CRT is a "split interest" giving vehicle that allows you, as the donor, to make contributions to the trust and receive a partial tax deduction. The CRT funds are then invested and the CRT pays an income at a more favorable rate to the donor or designated beneficiaries. These beneficiaries can vary and even included a donor-advised fund as the family foundation for addition tax-deductions. Once the last beneficiary dies, the remainder goes to charity or multiple charities as designated. Let's take a look at the diagram below:

Donating the Asset

1. You can donate many different and even complex assets to a CRT including stocks, real estate, private business interest, cash and much more.

2. You then receive a partial deduction based on the type of trust, the term or life expectancy and the rates.

You or designated beneficiaries receive income

1. This income can come annual, semi-annual, quarterly or monthly. Since the CRT is a variable rate, the income can vary based on the performance of the investment.

After the term of years (20 years Max) or the life of the last income beneficiary has passed, the remainder of the asset goes to charity.

1. When the asset is sold within the charitable remainder trust, there is not tax due to the tax-exempt status of the CRT. This helps minimize or eliminate heavy tax implications such as capital gains tax while benefiting the donors charitable cause and those who receive their charity.

Is a CRT right for you?

CRT's are an amazing charitable strategy, but they are not always right for every situation or every person. If you are needing tax strategies or are feeling charitable, there are many different strategies available.

It is best to consult with your tax and legal professional on what is best for you. If they are not too familiar with charitable strategies like a CRT, I am more than happy to jump on a conference call with you and your team and go over what can be done so that you can make the best informed decision.

You can schedule time with my by going to www.legacyglobal.org/mike and schedule time with me to go over your specific situation.