Estate Planning – Charitable Giving
A charitable remainder trust, the most common type of charitable trust, is an irrevocable trust that is set up when a grantor transfers to the trust the property the grantor wants to donate to a charity. The charity serves as trustee of the trust, and manages or invests the property so it will produce income for the grantor. The charity then pays the grantor, or a person the grantor names, a portion of the income generated by the trust property for a certain number of years, or for the grantor’s entire life. At the grantor’s death, the remaining property goes to charity.
Important tax advantages for a charitable remainder trust include an income tax deduction (spread out over a period of five years), as well as the avoidance of federal estate tax – when the trust property eventually goes to the charity outright (at the grantor’s death or at the end of the payment period specified by the grantor) the property is no longer in the grantor’s estate, making the property not subject to federal estate tax.
Our attorneys are happy to provide you with guidance on whether this approach would fit your charitable intentions and estate planning needs.