Estate Planning: Three Benefits Of Setting Up A Charitable Remainder Trust

Do you want to leave money to charity as part of your estate plan? A Charitable Remainder Trust (CRT) may be your best option. The Internal Revenue Service (IRS) explains that a Charitable Remainder Trust is a type of irrevocable trust that allows you to “donate assets to charity and draw annual income for life or for a specific time period.” Here, our Boston estate planning lawyer highlights three benefits of setting up a Charitable Remainder Trust in Massachusetts.

1. Support an Important Cause that You Care About 

As a starting point, it is important to emphasize that a Charitable Remainder Trust is a tool that allows people to leave money/assets to support a good cause (charity) in an efficient way. By transferring assets into a well-structured CRT, you will set up a trust that, upon your passing, will transfer all of the remaining assets within it to your selected charity. It is an estate planning option that not only allows you to contribute significantly to a cause you are passionate about but also ensures that your philanthropic values live on. A CRT can be a powerful tool to make an impact. 

2. Provide a Predictable Income for a Pre-Specified Period of Time 

Why use a CRT instead of just transferring funds directly to a charity? A key reason is that there are other benefits. Most notably, a Charitable Remainder Trust can provide financial security to you—or another selected beneficiary—for a predetermined period of time. When you establish a CRT, you or designated beneficiaries receive regular income payments for a term that you specify—either for life or a fixed number of years. It is a structure that offers two key advantages:

1. It secures a steady stream of income for you or your loved ones; and
2. It ultimately benefits the charitable organization of your choice. 

3. Defer Income Taxes On the Sale of Certain Assets 

Another key benefit of a charitable remainder trust is that it offers some important, potentially valuable, tax advantages. It grants a person the ability to defer income taxes on the sale of highly appreciated assets. When you contribute assets like stocks or real estate to a CRT and the trust sells them, the sale is not subject to immediate capital gains tax. The deferral allows the full sale proceeds to be reinvested by the trust, potentially increasing the income payments you receive and ultimately benefiting the charity.

The Takeaway: Tax efficiency makes CRTs an attractive option for donors looking to maximize their charitable contributions, secure an income, and also minimize their tax liabilities.

Contact Our Boston Estate Planning Attorney Today

At Fisher Law LLC, our Boston estate planning lawyers help people handle charitable contributions as part of their estate plan. If you have any questions about charitable remainder trusts, we are here to help. Contact our estate planning firm today to set up your complete case review. Our firm provides legal representation to people and families in Boston and throughout the region.

Source:

irs.gov/charities-non-profits/charitable-remainder-trusts