What Is A Charitable Remainder Trust?A charitable remainder trust is simply a trust account that is designed to offer the donor many great tax advantages that are quite helpful in managing their assets as well as ensuring that as many issues as possible are completely manageable without the need for litigation or the need to challenge a will. Your first biggest benefit that makes a charitable remainder trust popular is you are able to protect your property from any creditors that you may have. This can even include bankruptcy! This is a huge help for many people who had been financially stable at one point and have started having severe financial troubles. A few small mistakes should not cost you your entire estate.
Other great aspects of a charitable remainder trust is you are able to avoid much of the taxes associated with passing along property. You can have a wide variety of investments that help provide you with income, yet you do not have to pay taxes on the appreciated value of the estate. This means that you are able to spread the payments out over time into much easier to manage pieces that also ends up saving a lot of money. In a situation where a trust is not used taxes for the entire estate would be due each year. In a charitable remainder trust, the taxes are only due as distributions occur and only the distribution amount is taxable. This means that taxes are only paid once so you are able to see a huge savings. Another key question that is raised in connection to what is a charitable remainder trust is asking what happens to the trust once the donor dies. The simplest answer is that the remainder of the charitable remainder trust is then presented or transferred over to the charity of your choice that is set forth in the trust. This ensures that there are no legal battles that can ensue and it reduces your expenses while you are alive. As you can see, there are several things that make the question of what is a charitable remainder trust quite complex, yet rewarding to learn about. If you are looking for the best way to ensure you are protecting your property, avoiding as many taxes as possibly legally, and you wish to pass along much of your estate to a charity then this is often one of the best choices you can make. You are able to reap so many benefits and you are still able to decide exactly what you want to happen to your estate. It is truly a win/win situation that many people do not realize exists. |