Charitable Remainder Trust

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Charitable Remainder Trust

A charitable remainder trust is a tax-exempt irrevocable trust designed to reduce the taxable income of individuals by first dispersing income to the beneficiaries of the trust for a specified period of time and then donating the remainder of the trust to the designated charity. 

This type of trust is designed to take ownership of certain assets, then provide an income stream from those assets to its beneficiaries. The creator and funder of the trust can be a beneficiary. Any assets that remain after the deaths of all beneficiaries are sold and the proceeds then go to a designated charity. This is a “split-interest” giving vehicle that allows a trustor to make contributions, be eligible for a partial tax deduction, and donate remaining assets. The trust is not liable for any capital gains tax when this happens, and the trustmaker can claim a present-day partial tax deduction for the portion of the trust that passes to a charity or charities, however, the trust must be irrevocable.

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