A charitable remainder trust is a trust which allows the creators to provide assets to a charitable organization and at the same time allows the creators, often also serving as trustees, to receive income from the trust assets. At the death of the donors, the trust is terminated and the charitable organization will receive the remainder of the trust assets.
Creating a charitable trust has many benefits. The creators will have the ability to provide funds to the charitable organizations of their choice, and the remainder interest passing to charity will be deductible for income and estate tax purposes.
A charitable remainder trust must be either an annuity trust or a unitrust. An annuity trust allows the trust to pay lifetime recipients a fixed annuity each year. On the other hand, an unitrist allows the trust to pay the lifetime recipient a fixed percentage of the annual net fair market value of the trust assets.
Careful planning is crucial to the success of a charitable remainder trust. Important considerations include whether an annuity trust or unitrust is more suitable for you, the length of the trust, and the selection of trustees and charitable beneficiaries. In addition, cooperation from your financial advisor is necessary to obtain adequate and complete information.
Here at Chauvel & Glatt, we will speak with your financial advisor to find the best fit for your needs. To learn how our attorneys can assist you with your estate planning or other legal needs, contact us today.
