Benefits of a Charitable Remainder Trust

Saturday, February 18th, 2017, 12:17 am

Many Brooklyn residents choose to leave a charitable donation behind as part of their estate plan. While this can be a great way to continue doing good after you’re gone, you will want to do some planning before leaving a donation.


Creating your donation as a charitable remainder trust, or CRT, can be beneficial for both you and the organization you’re donating to.

What is a Charitable Remainder Trust?


Setting up a charitable remainder trust allows you to contribute to the organization or charity of your choosing after you pass while also giving you and your family sizable tax breaks. However, charitable remainder trusts are irrevocable. Once they are put in place, you will not be able to change your mind and regain control of the funds.


Once you draft and establish a CRT, the charity or organization you’re donating to becomes the trustee. During the time that you are still alive, they will invest this money or manage it in a way that brings in money for you.


After you pass, the charity is able to take control of the property and use it how they wish.

What are the Benefits of a CRT?


A CRT is beneficial for the charity or organization because they receive a sizable donation, but the owner of the trust can actually benefit in multiple ways from setting up a CRT.


One of the biggest benefits of a CRT is the tax deductions associated with the donation. Under a CRT, owners can receive a tax deduction on value of the gift they give.


Because the property exits the estate when the owner passes away, that property is not subject to federal estate tax. For individuals with large estates, this can be a great way to save money on fees and taxes.


The last tax benefit trust owners have is capital gains tax. For property that has grown significantly since the original purchase, this can be a great way to get around paying taxes on the profit you made.


If you need additional help understanding if a CRT is right for you, contact the estate planning team at Michael F. Kanzer & Associates, P.C.

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