What Is A Charitable Remainder Trust?

In the 1960s, the Charitable Remainder Trust entity was established by Congress to encourage private citizens to make donations to certain charitable organizations.

If you are looking for a new investment to add to your portfolio, there are different types of Charitable Remainder Trusts and one of them may be suitable for your situation and add value to your financial planning. A financial planner is the best person to advise you on this issue, because these trusts are involved with the taxation laws which are constantly changing.

A Charitable Remainder Trust is a government authorized identity with flexible options, so you are sure to find one that fits with your long-term financial plan. They are also exempt from income tax, making them an attractive financial asset for you.

When you set up the trust, you name a charitable organization as the qualifying end beneficiary. However, you remain the beneficiary of the trust, and you can name other beneficiaries after you die. Only when all the named beneficiaries have died, is the charitable organization entitled to receive the assets held in the trust.

In the mean time, you have a financial entity where you can put assets, generate an income and be eligible for a tax deduction. You also have the knowledge that eventually, the charitable organization of your choice will receive the assets from the trust. It is a perfect vehicle for giving and receiving at the same time.

On the death of yourself, or the last beneficiary you named, the entire contents of the trust automatically go to the charity you named. You can change the beneficiary organization at any time, so long as the new beneficiary falls within the guidelines set down by Congress. Generally, the organizations that are approved include hospitals, research institutions, non-profit universities and churches.

You will probably be advised to choose between the two main types of CRT; these are the Unitrust and the Annuity Trust. You can continue to contribute to the Unitrust but not with the Annuity Trust, and the dividends are calculated differently.

Investigate whether a charitable remainder trust is suitable for your financial plan.