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Should a Charitable Remainder Trust be a Part of Your Estate Plan?

In recent years, clients have approached us with questions about how to prepare their estate plan and benefit from tax-saving tools. One of these tools is known as a Charitable Remainder Trust (CRT). A CRT is an irrevocable trust that generates an income stream from the trust assets for the Donors or other non-charitable beneficiaries, for a term of years, or for the life of one or more non-charitable beneficiaries. At the expiration of the term of years or on the death of the donors, the trust is terminated, and the charitable organization nominated by the Donors will receive the remainder of the trust assets.

Creating a charitable trust has many benefits. The creators will have the ability to provide funds to the charitable organizations of their choice, and the remainder interest passing to charity will be deductible for income and estate tax purposes. Moreover, appreciated assets may be transferred to the CRT and sold without paying capital gains taxes.

A charitable remainder trust must be either an annuity trust or a unitrust. An annuity trust allows the trust to pay lifetime recipients a fixed annuity each year. A unitrust allows the trust to pay the lifetime recipient a fixed percentage of the annual net fair market value of the trust assets.

Careful planning is crucial to the success of a charitable remainder trust. Important considerations include whether an annuity trust or unitrust is more suitable for you, the length of the trust, and the selection of trustees and charitable beneficiaries. In addition, cooperation from your financial advisor is necessary to obtain adequate and complete information.

Here at Chauvel & Glatt, we will speak with your financial advisor to find the best fit for your needs. To learn how our attorneys can assist you with your estate planning or other legal needs, contact us today.


This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500.


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