Estate planning is more than creating a will or thinking about the kinds of advance medical directives you want to have in place. It’s also about considering how you want to be remembered after you die and whether you want to make charitable donations a part of your legacy.
If you are thinking of giving to charity through your estate plan you may want to consider a CRT, short for a charitable remainder trust. While these trusts are a little complicated and you should discuss them in more depth with your lawyer, here are the basics you should know.
Income and Donation
When you create a CRT you take some of your property, transfer it to the trust, direct the trustee to sell it, and then use the sale funds to generate income for yourself over a number of years. When you do this you don’t have to immediately pay the capital gains taxes on the sale of that property and can even get an additional tax benefit based on the value of the charitable gift you will make.
During the lifetime of the trust the income the trust generates will be transferred to you. You can take either a fixed income or fixed percentage of the trust value, and can do so over your lifetime. Also, if you establish the trust correctly you can even generate income for your children during their lifetimes. Once the trust is done transferring income to you after you die, or to others as you specify, the remaining trust property is transferred to the charity.
CRTs are one of many planning techniques that allow for tax-advantaged donations to charity. To learn more, consult with an experienced and qualified estate planning attorney.
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