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

A charitable remainder trust (CRT) is a type of estate planning tool that is used to provide financial support to a charitable organization while also providing benefits to the donor. In Arkansas, a CRT is a legal trust that allows the donor to give part or all of their assets to a charitable organization while also receiving tax advantages and other benefits. With a CRT, the donor retains an annuity or unitrust interest in the trust for a period of years, or for the lifetime of the donor and/or a designated beneficiary. Once the trust is established, the donor transfers cash or other assets to the charitable organization, which then invests the funds into a trust fund. The trust fund produces income that is paid to the individual donor or other designated beneficiary. The amount of the payment is based on the trust’s rate of return and the age of the beneficiary. Also, the donor receives an immediate tax deduction for the present value of the remainder interest in the trust that is transferred to the charitable organization. The charitable organization manages the trust for the benefit of the donor and beneficiaries. The charitable organization also receives the remaining trust assets at the end of the trust term. This ensures that the donor’s assets are used to support the charitable organization’s mission, while ensuring that the donor and their designated beneficiaries receive the benefits from the trust.

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

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