Charitable remainder trust

(redirected from Split Interest Trust)
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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 ?
Split interest trust, according to the 1999 Instructions for Form 5227.--A trust that "is not exempt from tax under section 501(a); ...
Split interest trusts file Form 5227 annually to report financial activity and to determine if the trust should be treated as a private foundation.
All split interest trusts must file Form 5227, Split Interest Trust Information Return, annually to report their financial activities and to determine if the trust is to be treated as a private foundation.
All statistics in this article are based on a sample of Forms 5227, the Split Interest Trust Information Return, from Reporting Year 1998.
* The use of split interest trusts, such as charitable remainder trusts, still can be used to accomplish lifetime income tax and charitable planning objectives.
Using the theory that an asset can be separated into two components, a life (or term certain period) interest and a death (or other remainder) interest, noncharitable and charitable split interest trusts are current tax planning tools with their distinguishing features and benefits outlined in Exhibit 4.