Charitable Remainder Trusts

Charitable Remainder Trusts

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Charitable Remainder Trusts

Charitable Remainder Trusts definition:  (CRT) Charitable remainder trusts are deductible; therefore reducing income and estate taxes. They are not tax-exempt; beneficiaries must pay income tax on income received from the trust. The grantor and/or spouse or other beneficiary receive the income from the trust during their lifetime. When the trust expires, the remaining amount in the trust is donated to charity.  The present value of the charity’s remainder interest (fair market value minus donor’s retained value) is tax deductible when the trust is established. When funding the trust, highly appreciated assets may be transferred to a charitable remainder trust without paying capital gains tax. For example, real estate or stock purchased at a low basis which has appreciated in value can be sold or transferred to the charitable remainder trust without paying capital gains tax.

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