Advantages of Charitable Remainder Trusts

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What’s a Charitable Remainder Trust?

A charitable remainder trust, or “CRT”, is a type of trust that provides annual payments to named beneficiaries.  The payments may be made for life or for a term of years.  Most importantly, the remainder interest of the trust is paid out to the benefit of a named charity.  This portion of the trust is irrevocable; however IRS codes create several tax benefits for creators of charitable remainder trusts.

What are Some Advantages of a Charitable Remainder Trust?

There are several advantages associated with CRT’s, most of them having to do with tax mechanisms.  These may include:

While CRT’s require the assets to ultimately be given to a charity, these advantages create many favorable incentives for people to create such a trust.  In particular, CRT’s are favorable for persons who are already contemplating transferring some of their assets to a charitable entity.

Are There Different Types of Charitable Remainder Trusts?

Yes- there are two basic types of CRT’s, with the difference having to do with the way that the payments are made out.  These are:

Do I Need a Lawyer for Assistance With a Charitable Remainder Trust?

A charitable remainder trust can be a useful tool for persons seeking different ways to distribute their assets.  However, creating an executing a charitable remainder trust is usually quite complicated.  CRT’s generally require the expert advice of a qualified tax or trusts attorney.  You may wish to hire an experienced lawyer if you need help creating a charitable remainder trust.  An attorney can also represent you in court if any disputes arise over a CRT.

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Last Modified: 08-09-2013 03:54 PM PDT

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