A Charitable Remainder Trust (CRT) can provide you, or anyone else you choose, with lifetime income and provide the charity of your choice with remaining trust assets upon your death. When you set up a CRT, you receive an immediate federal income tax deduction and defer long-term capital gains taxes on the sale of highly appreciated property you place into the trust. You can name yourself as beneficiary and even name joint beneficiaries over one or more lifetimes. A CRT is an irrevocable trust, which means that once established, the trust cannot be modified or terminated without the beneficiary’s permission.

There are two basic types of CRTs: the Charitable Remainder Unitrust and the Charitable Remainder Annuity Trust. With a Charitable Remainder Unitrust, you receive a fixed amount (not less than 5%) of the trust assets as income each year. Following the death of the income beneficiaries, the charity receives the trust property. Annual payments to beneficiaries from a Charitable Remainder Annuity Trust must be a fixed dollar amount that remains the same until the death of the income beneficiaries. It must be equal to 5% or more of the trust’s starting value.

To set up a charitable remainder trust, you need to have a good understanding of a wide range of issues from tax laws to investment strategies. Setting up and maintaining a charitable remainder trust requires professional expertise and should only be administered by a qualified professional. Consult with your legal and tax advisors to determine if a CRT meets your needs and objectives.

Any comments regarding tax implications are informational only; Scott & Stringfellow does not provide tax or legal advice. As always, you should consult your tax or legal advisor.