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.