The Charitable Remainder Trust (CRT) allows you to gift your property to
charity, protect it from your creditors, save taxes, receive a lifetime
income, and still leave your heirs whatever amount you gifted to charity.
As the trust grantor, you select a tax-exempt charitable organization
as the beneficiary of the CRT. By funding the trust, you make a charitable
donation and earn a tax deduction. As the lifetime income beneficiary,
the trust will pay you an annual income. Thus, you get an immediate tax
deduction and a lifetime income stream.
If you donate assets to a CRT, you roughly get the same income, and can
deduct the donation as a charitable contribution. The taxes saved through
the deduction, can buy life insurance to give your heirs about the same
amount they would receive had you not funded the CRT. CRTs are especially
sensible when you have appreciated assets and want a fixed income for
your retirement. If you want to give to charity, the CRT can be an effective
tax-saver, asset protector and income generator. There are also several
variations on the CRT that you may consider with your estate planner.