Selecting a Charitable Remainder Trust Attorney

Charitable remainder trusts (CRTs) offer both charitable and financial advantages, enabling individuals to secure a lifetime income while benefiting their chosen charities. Consulting with an experienced trust attorney is crucial for navigating the setup process. This article explores the types of CRTs, their benefits, and how to choose an experienced attorney.

What is a Charitable Remainder Trust?

A charitable remainder trust allows individuals to donate assets, receive a tax deduction, and still secure income for themselves or their heirs. The trust’s assets are invested, with annual income paid to beneficiaries, and the remaining assets eventually going to charity.

Types of Charitable Remainder Trust

• Charitable Remainder Annuity Trust (CRAT): Pays a fixed annual annuity based on the initial trust value.
• Charitable Remainder Unitrust (CRUT): Pays an annual percentage of the trust’s current value, which can fluctuate over time.
• Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT): Pays the lesser of a fixed percentage or actual income, with the ability to make up shortfalls in future years.
• Flip Charitable Remainder Unitrust (Flip CRUT): Allows income deferral until a specific event, like the sale of property, before converting back to a standard CRUT.

Benefits of a Charitable Remainder Trust

• Tax Benefits: Immediate income tax deduction for donated assets, which grow tax-exempt, with no capital gains tax on the sale.
• Income Stream: Provides beneficiaries with a steady income, supporting retirement or heirs.
• Estate Planning: Reduces potential estate tax by moving assets out of the donor’s estate.

Setting Up a Charitable Remainder Trust

Setting up a CRT involves selecting a trustee to manage and invest the trust assets, choosing charitable beneficiaries, determining the income interest and trust term, and transferring assets into the trust.

Hiring a Charitable Remainder Trust Attorney

An experienced trust attorney is essential for ensuring the CRT complies with legal and tax requirements, addressing complex legal and tax issues, and aligning with estate planning goals.

FAQs

• Q: Minimum assets for a CRT? A: Typically, a minimum of $100,000 is recommended.
• Q: Can a CRT be altered or revoked? A: Generally, CRTs are irrevocable, with exceptions for fraud or mistake.
• Q: Can a CRT benefit multiple charities? A: Yes, income can be split among several charities.
• Q: How is CRT income taxed? A: Income is taxed as ordinary income to beneficiaries.
• Q: Can a CRT benefit both charities and individuals? A: Yes, income can be distributed to both charitable organizations and individuals.

Why Choose Us

At Hess-Verdon & Associates, our attorneys specialize in estate planning and trust law, including CRTs. With deep knowledge of the legal and tax aspects of charitable giving, we provide personalized guidance to ensure your charitable goals are efficiently and effectively met.