Charitable Remainder Trust

Posted on November 24, 2010


A Charitable Remainder trust is an irrevocable trust that pays an annual income (such as an annuity or a unitrust amount, a fixed percentage of an annuity) for a period of time, or sometimes for life to a charity, but the grantor uses the money or income while they are alive. After the grantor has passed on, then the charity gets access to the income.
In this way the grantor avoids capital gains tax on the assets while he is alive, and gets the income tax deduction for the fair market value of the remainder interest that the trust earns. Also, the asset is removed from the grantor’s estate properties, which reduces estate taxes.
Go to Axsmith Law to learn more.