A CRT is an irrevocable trust designed to provide income to designated non-charitable beneficiaries for a specified period, with the remaining assets ultimately benefiting one or more charitable organizations. This structure not only facilitates your charitable intentions but also offers potential tax advantages and income streams.
Key Features of CRTs:
-
Income Provision: CRTs are structured to distribute a fixed percentage of the trust's assets to non-charitable beneficiaries, either for life or a term of up to 20 years. This ensures a steady income stream during the trust's term.
-
Charitable Beneficiaries: Upon the conclusion of the income distribution period, the remaining trust assets are transferred to the designated charitable organizations, fulfilling your philanthropic goals.
-
Tax Benefits: Establishing a CRT can provide immediate charitable income tax deductions based on the present value of the remainder interest designated for charity. Additionally, assets transferred to the CRT are generally removed from your taxable estate, potentially reducing estate taxes.
Types of CRTs:
-
Charitable Remainder Unitrust (CRUT): Distributes a fixed percentage of the trust's assets, recalculated annually, allowing payments to adjust with the trust's value.
-
Charitable Remainder Annuity Trust (CRAT): Provides a fixed dollar amount annually, offering consistent payments regardless of investment performance.
Considerations:
While CRTs offer significant benefits, it's essential to consider their irrevocable nature and the complexities involved in their establishment and administration. Engaging with experienced financial advisors is crucial to ensure that a CRT aligns with your overall financial and philanthropic objectives.
At BlueSky Wealth Advisors, our team of Certified Financial Planners (CFPs), Certified Public Accountants (CPAs), and Chartered Financial Analysts (CFAs) is dedicated to providing personalized guidance. We work collaboratively to design and implement strategies that harmonize your charitable goals with your financial well-being, ensuring a meaningful and lasting impact.
Learn more about our services by clicking here.
