What is a Charitable Remainder Trust?
A Charitable Remainder Trust is a gift that pays an annual income to the donor or designated income beneficiary or beneficiaries for a term of years or for the lifetime of the beneficiaries. At the death of the last income beneficiary, the trust transfers the remaining assets to Denver Botanic Gardens. This gift is a minimum of $100,000. A charitable remainder trust is especially attractive if the gift is some type of appreciated asset currently paying little in the way of a dividend or return. What are the benefits of a Charitable Remainder Trust? • An annual income, usually 5 to 7 percent of the trust’s asset value. • Avoidance of any capital gains tax on appreciated assets such as shares of stock or mutual funds or real property, such as real estate. • A charitable tax deduction in the year of the gift based on the estimated future gift value. • Potential estate tax savings due to the removal of the assets from your estate. • A charitable gift to the Gardens, possibly greater than y
A. A charitable remainder trust (CRT) allows you to benefit your favorite charity, receive a stream of income during your life, and receive favorable tax treatment. The mechanics of a CRT are as follows: execute the irrevocable trust instrument, then transfer assets (preferably stocks, real estate, or other property that has appreciated substantially in value since you acquired it) into the CRT. The CRT will pay you income for life (and a percentage of the principal if desired) and the remaining trust property will then pass to the charity at your death. Because the CRT is for the ultimate benefit of a charity, you can take a charitable income tax deduction now on the present value of the assets that will pass at your death, and you do not have to pay any capital gains tax. The CRT can then sell the appreciated asset without having to pay capital gains tax. This leaves the entire value of the assets in trust to generate an income stream for you (hopefully greater than the amount of inc
A Charitable Remainder Trust permits a donor to defer the income tax consequences on the sale of a capital gain property and make a charitable gift. The donor transfers property to the trust, retaining the right to receive a stream of annual payments for a term chosen by the donor. At the donor’s death the remaining assets go to the charity. Two common types are Charitable Remainder Annuity Trusts (CRAT) and Charitable Remainder Unitrusts (CRUT).
A Charitable Remainder Trust permits a donor to defer the income tax consequences on the sale of a capital gain property and make a charitable gift. The donor transfers property to the trust, retaining the right to receive a stream of annual payments for a term chosen by the donor. At the donor’s death the remaining assets go to the charity. Two common types are Charitable Remainder Annuity Trusts and Charitable Remainder Unitrusts.
You can reduce your estate by transferring establishing a Charitable Remainder Trust. By doing so, you can reduce your estate and while donating to a charity of your choice. The Charitable Remainder Trust is useful for appreciated assets (stocks, real estate, etc). The asset is transferred to an irrevocable trust, removing it from your estate and providing you with a charitable income tax deduction. The trust then sells the asset at the fair market value, but is not required to pay capital gains tax. You retain a lifetime income stream from the trust that is higher than you would otherwise receive since the principal is not reduced by capital gains tax. At your death, your favorite charity receives the assets. Disclaimer The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of an
