What is A Charitable Remainder Trust

There are many different types of trust funds that you can use to benefit your family and save money. One of the most interesting is the charitable remainder trust. This trust allows you to contribute your savings to your favorite charity, and it also keeps your money safe from estate taxes. If you are passionate about a certain cause and want to ensure that your savings benefit something that is important to you, then a charitable remainder trust is a great way to do it.

Something that is very unique about a charitable remainder trust is that it also allows you to provide money for beneficiaries. Every year, the trust gives a split payout to both the charity and your beneficiaries. Since none of this money is subject to estate taxes, your family saves money in the long run, and you can feel great knowing that you’ve contributed to your favorite charity. You can also name yourself as a beneficiary of your trust for a limited number of years if you prefer to split the money up that way.

There are two types of charitable remainder trusts. With a charitable remainder unitrust, a fixed percentage of the trust goes to the charity each year. You can also make additional contributions if you choose. With an annuity trust, a fixed annuity is distributed to the charity each year instead, and you cannot make any additional contributions. A charitable remainder trust also makes you eligible for certain charitable tax deductions, which is something that can have huge financial benefits for your family in the long run. It’s important to make sure that the charity you choose is eligible for this specific deduction, however. It’s called the estate tax charitable deduction, and not all charities qualify for it, so it’s important to check and make sure that your charity of choice will be eligible before setting up the trust.

There are many small rules that apply to charitable remainder trusts that would be difficult to cover in one article. Therefore, it is very important that you consult a qualified estate lawyer when setting up your trust. All of the documentation should be reviewed very thoroughly and checked multiple times to ensure that everything is legal and that it can continue to stand after your death, if necessary. Mistakes with these types of trusts are extremely common, so a good lawyer will be able to review the trust adequately to rule out any potential problems.

These trusts are particularly helpful for those who have substantial long term savings and investments. This is because the more money you have placed into the trust, the more taxes you will avoid. You’ll save money in multiple ways – you’ll get an income tax deduction every year, you’ll avoid estate taxes that can take out large portions of your money, and any money you make from trust investments will be tax exempt as well. If there is a charity that is particularly close to your heart, then there’s also the emotional benefit of knowing you are contributing a substantial sum of money to them. You can also set up the trust to benefit multiple charities at a time.

There are several different ways to structure your beneficiary payouts as well. You can have the trust support one or more beneficiaries for their entire lives – an option commonly chosen by people who have kids. You can also set up an income flow for multiple beneficiaries lasting for a term of less than 20 years. You can also make yourself the recipient of a temporary income stream for a short period of time.