Charitable Remainder Trusts

Charitable Remainder Trusts (CRT) in Brief:

Highlights:

  • Allows you to avoid paying capital gains tax on the sale of any highly appreciated asset
  • Allows you to take a deduction for the value of the asset to be sold
  • When combined with life insurance planning, the CRT may allow you to exclude the asset from your estate (see note below)·assets held in the CRT may not be reached by your creditors, and are not subject to income tax or estate tax
  • Suitable for property owners who have big built-in gains if they sold their property
  • Allows you to keep a lifetime interest in the income generated by the asset -even after its transferred to the CRT

How it Works:

  • You transfer highly appreciated property to a Private Foundation and receive a corresponding tax deduction
  • The CRT sells the assets, pays no tax, assets are now protected from creditors and estate tax

The CRT may distribute all or part of its income to you each year for the rest of your life, with a charitable organization taking the asset upon your death (the charitable organization can be your private foundation)·If you prefer, you can use the moneys saved as a result of the tax deduction you received to purchase life insurance in an amount sufficient to replace the value of the asset transferred to the CRT, allowing the full value of the asset to be received by heirs free of estate and income tax.