The Charitable Remainder Trust (CRT) allows you to gift your property to charity, protect it from your creditors, save taxes, receive lifetime income, and still leave your heirs whatever amount you gifted to charity. As the trust grantor, you select a tax-exempt charitable organization as the beneficiary of the CRT. By funding the trust, you are making a charitable donation and are earning a tax deduction. As the lifetime income beneficiary, the trust will pay you an annual income. It’s the best of both worlds and a simple vehicle for protecting your assets.

With the holiday season upon us, it is important that we not lose sight of the fact that charity begins at home.  While serving food at a soup kitchen or donating toys to a hospital are noble ventures that should definitely be continued, neither of those acts of charity will provide you with the same kind of tax savings and asset protection that you will receive from opening a charitable remainder trust. 

A charitable remainder trust (“CRT”) can be established during the lifetime of the donor of the trust or upon his death.  If the CRT is established during the lifetime of the donor, it will give the donor an income tax deduction each year the trust exists.  In addition to the income tax deduction, the CRT itself is a tax exempt entity which means that it is a great place to store real estate or securities owned for longer than one year.  The CRT will not recognize income resulting from the sale of long-term capital gain property contributed to the CRT by the donor.

A CRT is an example of an extremely viable way to minimize or avoid the imposition of federal income taxes and reduce future estate taxes simultaneously.  As with all estate planning tools, the CRT has some minor disadvantages, but those disadvantages are insignificant when compared to the potential income and estate tax savings that they may provide.

For more information on charitable remainder trusts, or to learn about how you can protect your assets and provide for your family for generations to come, please contact Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.