How to add a charitable remainder trust to your estate plan

Many people make charitable giving a part of their estate plans. Giving assets to charity provides tax benefits as well as a legacy you can be proud of. But with so many charitable organizations out there and numerous methods of giving, where does one start?

Charitable giving in an estate plan can work in a variety of ways. Today we cover the basics of charitable remainder trusts and their benefits.

What is a charitable remainder trust?

A charitable remainder trust (CRT) provides income for the donor, funded by cash, securities or other property, during the donor’s life or for a set period. After the donor dies, any remaining assets in the trust go to the chosen charity.

What are the tax benefits of a CRT?

Donations to a charitable remainder trust are partially tax-deductible. Donors can claim the deduction on their income tax return. Plus, investment income in a CRT is tax-exempt.

Time limitations for charitable remainder trusts

The primary drawback of a CRT is its limited life-span. You and your family benefit from the trust for a set number of years or your lifetime, and then relinquish control of those assets to your chosen charity. But, there are options for families that wish to retain more control over funds in a charitable remainder trust.

Whether you are looking to donate assets to charity during your lifetime or after death, planning is essential. Consult with a financial professional to learn more about how to incorporate charitable giving into your estate plan.