What Are the Benefits of a Charitable Remainder Trust?

When your hard work and investments pay off or an inheritance comes in that you don't need right now, a charitable remainder trust can provide income to your during your lifetime and leave a portion of the remainder to the charity of your choice when you're gone.

Minimizing tax obligations

The best part is that a charitable remainder trust has tax advantages, which are an important aspect of estate planning. Most people are eager for their intended beneficiaries to receive the greatest portion of assets possible, while legally minimizing the portion which will go to the government in the form of various taxes.

If part of your estate planning involves giving money or property to a charitable entity, a charitable remainder trust is one of the most tax-efficient ways to do so. Created by Congress in 1969, charitable remainder trusts are a type of split-interest trust under Internal Revenue Service rules. (A split-interest trust is one where trust assets are split between charitable and non-charitable beneficiaries.)

Providing income to the donor

To qualify for tax-exempt status, a charitable remainder trust must provide for at least annual payments for up to 20 years or for the life of the donor. The trust must also benefit a non-profit charity and leave at least 10 percent of the fair market value of trust assets to the charity when the trust terminates.

Charitable remainder trusts are just one of many types of tax-saving trusts available to Texas residents. Other structured trusts may be a better fit for your specific needs. Learn more about charitable remainder trusts and other types of trusts by contacting the Peterson Law Group to schedule a meeting. Call 979-703-7014 today or visit us online to request a contact, sign up for our newsletter or learn more about the services we provide.