The Charitable Remainder Trust (CRT) will achieve all three of these goals. A CRT is an irrevocable trust that provides for specific distribution, at least annually, to one or more non-charitable income recipients for a specified period of time with the remainder interest paid to at least one charity.
The grantor transfers assets into the trust in which a specified amount is paid to the beneficiary throughout his or her lifetime. As the lifetime income beneficiary, the trust will pay you an annual income. There is also the potential for growth of that income over time. A CRT may be a good fit for you if you are looking for a fixed income for retirement and if you have appreciated assets.
As the grantor of the trust, you will choose a tax-exempt charitable organization to be the beneficiary of the CRT. When you add assets into the trust, you are making a charitable donation and thus will earn a tax deduction. By moving your assets into a CRT, you will save a significant portion of your assets from capital gains taxes and estate taxes.
After the beneficiary’s death or a designated time period, the remainder of the CRT becomes the property of your choice of charity; hence the name, Charitable Remainder Trust. If the charity you chose shuts down before you pass away, the trust may fail upon your death or the monies may be given to the “nearest substitute” of the charity. It is important to keep this in mind when selecting a charity.
Because it is an irrevocable trust, you cannot change the distribution of funds once you transfer them into a CRT. However, as the grantor, you determine how much of your assets are transferred to the CRT; you can integrate a CRT with additional Asset Protection and Estate Planning strategies. This trust is a viable protection strategy for anyone who wishes to donate their assets to a worthy cause while also protecting them from financial threats during their lifetime.
For more information about Charitable Remainder Trusts, contact The Presser Law Firm, P.A. for a complimentary preliminary consultation.