What is a charitable remainder trust and how does it work?

A charitable remainder trust (CRT) is an estate planning tool that can be used by individuals in Alaska who are interested in making a charitable contribution while also taking advantage of tax benefits. A CRT allows individuals to transfer assets into a trust that will eventually be donated to a charity of their choice. The individual, or a beneficiary, will receive a fixed amount of money each year from the trust, for a set period of time, or until the trust is depleted. The main advantage of a CRT is that it gives individuals the chance to donate to a charity while also seeing immediate tax benefits. When the assets are transferred into the CRT, the individual is eligible for an immediate income tax deduction. The deduction is based on the present value of the ultimate charitable gift. Furthermore, the cash payments received by the individual from the CRT are also tax-free. Lastly, CRTs also allow individuals to reduce the amount of estate tax their families will have to pay. This is because any assets in the trust are not counted when calculating the taxable value of the estate. By using a CRT, individuals in Alaska can support their favorite charity, reduce their own tax burden, and protect their heirs from estate tax liability.

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What is a charitable remainder trust and how does it work?

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