Charitable Remainder Trusts (CRTs) represent a sophisticated philanthropic planning vehicle that merits attention from professional advisors serving charitably-inclined clients. This overview addresses key aspects of CRTs for your client consultation framework.
Structure and Function
A Charitable Remainder Trust is established as an independent irrevocable trust that provides income distributions to designated beneficiaries (typically the donor and/or family members) for either a lifetime or specified term. Upon termination of the income interest, remaining trust assets transfer to qualified charitable organizations, such as a fund at the Community Foundation.
Tax Advantages
The irrevocable nature of the CRT structure generates an immediate charitable income tax deduction calculated as the present value of the remainder interest, determined according to IRS regulations and applicable federal rates. Additionally, assets held within the CRT structure remain outside the grantor's estate for estate tax purposes.
Optimal Client Profile
CRTs are particularly advantageous for clients holding significantly appreciated assets—marketable securities, real estate or closely-held business interests. The trust structure facilitates the sale of these assets without immediate capital gains tax liability, allowing for reinvestment of the full proceeds to generate income.
Professional Consultation
The Community Foundation stands ready to provide guidance regarding charitable giving techniques and assist in identifying optimal strategies aligned with your clients' objectives.
We look forward to collaborating with you on your clients' philanthropic planning needs.