Charitable remainder trust


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Related to Charitable remainder trust: Charitable Lead Trusts

Charitable remainder trust

An irrevocable trust that pays income to a designated person or persons until the grantor's death, when the income is passed on to a designated charity. A charitable lead trust by contrast allows the charity to receive income during the grantor's life, and the remaining income to pass to designated family members upon the grantor's death.

Charitable Remainder Trust

An irrevocable trust in which the grantor deposits assets with the income from the investment of these assets given to beneficiaries for a certain period of time. After the time expires, the remainder of the assets and income are donated to charity. A charitable remainder trust allows the grantor to provide for his/her survivors after death while reducing to a minimum the estate tax because the assets are ultimately directed to charity.

charitable remainder trust

A trust that pays an income to one or more individuals for a specified length of time then leaves the remainder of the trust to a designated charity. A charitable remainder trust can produce substantial tax benefits and is particularly suitable for use by a married couple with no children. Compare charitable lead trust.

Charitable remainder trust.

A charitable remainder trust (CRT) is an irrevocable trust designed to provide income to you or a beneficiary for either a fixed period or until the recipient dies. At that point, all remaining assets go to the charity named as ultimate beneficiary.

At the time you establish the trust, you can deduct the discounted present value of the assets as a charitable contribution. That value The value, which is calculated using IRS tables, may be less than the market value of these assets.

Transferring assets in a CRT not only reduces the value of your estate for estate tax purposes but also eliminates potential capital gains tax on any increased value of the assets.

References in periodicals archive ?
In a revenue ruling, the IRS approved a charitable remainder trust that provided distributions for the benefit of an incompetent individual for that person's life.
(11c) A charitable remainder trust that received unrelated business taxable income from its investments in three limited partnerships was held to be taxable as a complex trust under IRC Section 664(c) to the full extent of its income.
Charitable remainder annuity trust (CRAT)--A charitable remainder annuity trust is a charitable remainder trust in which the income payments to the private beneficiary are fixed.
Charitable remainder trusts are designed in one of two basic variations, as explained below:
Eric King, a Trust and Estate Consultant with The MassMutual Trust Company, FSB, a wholly-owned subsidiary of MassMutual, says the use of a Charitable Remainder Trust in combination with a Special Needs Trust is actually quite common because "the only possible non-person recipient of a Charitable Remainder Trust income stream is a Special Needs Trust." He says that many clients find such combinations "very favorable arrangements" because they "supply an income stream to the individual with a special need and also support a charity--normally the charity that's helped out the individual [with a disability or other special need]."
Here, planners should consider a joint and survivor charitable remainder trust that provides an annuity or unitrust amount to the client and his spouse for life.
The liquidation of nonpublic traded C corporation stock through a charitable remainder trust, however, can be quite advantageous to the donor if careful attention is paid to the details.
A "wealth replacement trust" (discussed below) is often used in conjunction with a charitable remainder trust to help replace the loss of value to the family of the donor of the trust assets passing to a charitable remainder trust.
Created in 1969 under Section 642(c) of the Internal Revenue Code, pooled income funds are similar to charitable remainder trusts in that they provide lifetime income for the donor, with the remainder of the fund going to the designated charity when the last beneficiary dies.
Had Professor Woods established a Charitable Remainder Trust, his children likely would have received lifetime payments well in excess of $250,000; and his estate would have been able to use a large tax deduction to offset taxes on other inheritable assets.
A common device for handling significant capital gains in a given year, he said, is the charitable remainder trust.
Among the more popular are permutations of two traditional charitable donation plans: the charitable remainder trust and the charitable lead trust.

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