The Charitable Remainder Trust:
A Great Way to Donate
Americans are known for their individual and collective generosity, whether in good or bad economic times. Interestingly, the charitable tax deduction has been part of the Internal Revenue Code since the federal taxation of taxpayer income began. Accordingly, taxpayers have some control over whether to be involuntary philanthropists (paying taxes) or to be voluntary philanthropists (making charitable gifts). One practical roadblock to making substantial gifts is the continuing need of many taxpayers for the lifetime income generated by their assets, even highly appreciated assets that generate little or no income. Fortunately, charitable trusts are designed to allow you to donate a generous gift to your charity, while benefiting yourself and your loved ones with tax and non-tax benefits.
The Charitable Remainder Trust
The Charitable Remainder Trust (CRT) is a popular form of “split-interest” charitable gifting. In short, a CRT can help you increase your current income, enjoy current income tax deductions and eventually leave a substantial financial legacy for your favorite charity (or charities).Is something this good for taxpayers and charities too good to be true? No, actually Internal Revenue Code § 664 was enacted in 1969, specifically authorizing “split-interest gifts” like the CRT. The federal government sought to encourage taxpayers to support private sector charities by making it possible for charitably-minded taxpayers to give and receive.
If you think a split-interest gift like this might fit into your charitable plans, call our office to learn more or schedule an appointment. Every individual circumstance is different, so we would need to look at the entire picture to know whether this might be a good strategy for you.