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What are the advantages unique to charitable remainder trusts?

by | Jun 2, 2022 | Estate Planning

A charitable remainder trust is a good potential option if you have highly appreciated assets that do not generate a large amount of income.

This is an irrevocable trust, and it allows you to gift substantial amounts to qualified charitable organizations.

Preserving the value of your assets

Charitable trusts can actually offer a number of tax advantages. It also allows you to retain any interest on any income your trust generates while you are alive.

You may have the ability to make a charitable income deduction right away, too. The calculated interest that this trust may generate in your lifetime could get used to determine the amount of the deduction.

You can also preserve the value of appreciated assets through this trust. The charitable trust can also sell the assets, but without paying capital tax gains on them. You can increase the size of your contribution, increase your own income, and fully reinvest in your property all at once with this move.

Avoiding tax liability on your estate

This also removes a portion of assets from your overall estate. This is a great way to minimize the tax liability of your estate as a whole. The IRS might include it in your gross property after your death, but your estate can still take a charitable deduction. They can use an amount equivalent to the property’s fair market value.

After your death, assets in that trust will then transfer to the organization, allowing you to do a good deed while also protecting your assets.