Charitable Remainder Trusts

For every 60 minutes you spend making money, spend 60 seconds thinking about how to protect it!

Charitable Remainder Trusts

A charitable remainder trust is a specific type of 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. Basically, similar to a regular trust – there is a beneficiary who receives monies during his or her lifetime, but upon the beneficiary's death or after a designated period of time, the remainder of the trust passes to a designated charity rather than to another individual.

There are great advantages to setting up this type of Trust as well as some disadvantages. The following will delineate a few of both:

Advantages:

  • Quarterly or yearly income for life; support for your spouse or other beneficiaries.
  • Potential for growth of income over time.
  • Investment diversification.
  • No capital gains tax on gifts of appreciated assets.
  • Charitable income tax deduction.
  • Gift and estate tax savings.
  • The charitable remainder trust allows you to do something great for your community, while still enjoying the benefits of your trust while you are alive.

Disadvantages:

  • The trust is irrevocable so once you transfer funds, you cannot change the way they are distributed.
  • If the charity you have chosen shuts down before you pass away, the trust may fail upon your death or the monies may be given to the "nearest substitute," which may not be your intended desire.
  • The assets allocated to the trust do not stay within your family, as the residuary of the trust is distributed, in full, to a charity outside of your family upon the death of the income beneficiary.

If you would like to set up one of these trusts or would like more information, please do not hesitate to contact our office today and speak to one of our knowledgeable Attorneys today!

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