Plan For The Future With Confidence

Plan For The Future With Confidence

Should I consider a charitable remainder trust for my estate?

On Behalf of | Nov 24, 2021 | Estate planning

If you want to diversify the types of trusts you have as part of your estate and ensure that some of your wealth goes to charities you support in Maryland, consider a charitable remainder trust (CRT). This financial instrument allows you to leave money to organizations you support while also providing money for you to live on while you’re still alive.

The value of charitable remainder trusts

CRTs are irrevocable trusts that can generate income for you or for other beneficiaries, while the remainder of the assets you donate to it go to designated charities. The value of CRTs lies in their ability these two things simultaneously. These trusts are flexible, offering you control over estate planning, tax management, and intended charitable beneficiaries while providing a steady income stream.

You can choose from two main types of CRTs:

-Charitable remainder annuity trusts (CRATs) that distribute a fixed annuity amount annually with no additional contributions
-Charitable remainder unitrusts (CRUTs)that allow additional contributions and distribute funds based on a fixed percentage

Your donations can be partially tax-deductible, while the income stream for you or your beneficiaries must be between 5% and 50%. After a specified time span or the death of the last beneficiary, the remainder of the funds goes to the designated charities. In some cases, the trustee may be able to change the CRT’s charitable beneficiary during the trust’s lifetime.

Benefits of CRTs

As part of a well-crafted estate plan, CRTs can provide you with numerous benefits. These include:

-Preserving the value of highly appreciable assets
-Good choice for asset diversification
-Income tax deductions

You may donate assets such as cash, real estate, a public traded securities, and other complex assets when you set up a CRT. Carefully evaluate whether a charitable trust is right for your needs.