Charitable Remainder Annuity Trust Explained
This is one of the most complex types of to really understand. However, it is a great idea for anyone who wants to pass along a sum of money to a charity upon their death; but still wants access to the money or at least a portion of the money for either themselves or the beneficiary of their choice while they are still living. The primary purpose of a charitable remainder annuity trust is to serve several purposes at the same time. When a charitable remainder annuity trust is first created, it is very similar to a traditional trust. As long as the donor of the trust is living, there is a certain amount that is paid each year to the donor of the trust, or whomever they specify as a beneficiary. These payments continue for as long as there are funds, and for as long as the donor is alive. However, the biggest difference between a traditional trust and a charitable remainder annuity trust occurs upon the death of the donor.
At the time of the death, the remainder of the money or property that is included in the charitable remainder annuity trust is transferred to the charity of the donor's choice. This ensures that the donor still has access to parts of the money while they are alive and can use the money, but it is still able to be donated to a charity of their choice upon their death. This is often something that is a smart decision to make if you suspect your family may try to challenge a will if you leave everything to charity then a charitable remainder annuity trust is the perfect solution that you can do to ensure your decision is not challenged. Traditionally it is virtually impossible to challenge a trust of any sort successfully because the donor must be alive when the trust is created and while it is managed. This gives plenty of time and evidence that the wishes are being followed. There are very few cases of a trust being challenged successfully resulting in the property and money being used for a different purpose other than what was intended in the trust. Because of the difficulty in challenging a trust, yet the flexibility to still have some of the money for living expenses a charitable remainder annuity trust is the perfect choice for many people. You can ensure that your wishes are followed; you can still help a charity, benefit from many tax advantages, and still be satisfied with the results. This is the almost perfect solution for most people who are concerned about their estate not going to charity as they wish. |