Charitable Remainder Trust
One method of making a gift with a retained right to income is a
charitable remainder trust. Let's look at some of the benefits a
charitable remainder trust can provide:
- An income for you and/or your beneficiaries for life or a
period of up to 20 years.
- An immediate and substantial income tax charitable deduction
(subject to the annual AGI limitations).
- No capital gains owed on the transfer of long-term appreciated
property to the trust.
- Reduction of your estate to avoid or reduce death taxes.
- Substantial reduction of probate costs, taxes, and other estate
An Immediate Charitable Deduction
A gift to a charitable remainder trust generates an
immediate income tax deduction, even though income is to be paid to
the donor (and/or other beneficiaries) for life. The exact amount
of the charitable deduction depends on the:
- value of the property transferred to the trust
- amount of income benefits that are payable each year to
- approximate length of time the income benefits will be
- interest rates prevailing at the time the gift is made
Despite the tax and financial benefits of a charitable remainder
trust, you should consider this kind of arrangement only if you and
your advisors determine it is compatible with your overall estate,
tax, and financial plan.
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