Charitable Remainder Trusts

One method of making a gift with a retained right to income is a charitable remainder trust. Let's look at some of the benefits a charitable remainder trust can provide:

  • An income for you and/or your beneficiaries for life or a period of up to 20 years
  • An immediate and substantial income tax charitable deduction (subject to certain income limitations) for itemizers
  • Potential avoidance of current capital gains taxes when the trust is funded with long-term appreciated property
  • Reduction of your estate to avoid or reduce death taxes
  • Substantial reduction of probate costs, taxes, and other estate transfer expenses. 
  • Unlike other life income gifts, you can also make additional gifts to the trust during its term and receive additional tax deductions, all while increasing the income your gift provides to the individuals you wish to benefit.

Download our information sheet on charitable remainder trusts here. 

An Immediate Charitable Deduction

A gift to a charitable remainder trust qualifies for an immediate income tax deduction, even though income is to be paid to the donor (and/or other beneficiaries) for life. The exact amount of the charitable deduction depends on the:

  • Value of the property transferred to the trust ($100,000 minimum value in cash, securities, or real property to establish your charitable remainder trust)
  • Amount of income benefits that are payable each year to individual beneficiaries
  • Approximate length of time the income benefits will be paid
  • Interest rates prevailing at the time the gift is made.

Despite the tax and financial benefits of a charitable remainder trust, you should consider this kind of arrangement only if you and your advisors determine it is compatible with your overall estate, tax and financial plan.