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

A Charitable Remainder Trust (CRT) is an estate planning tool available in California. It allows an individual to transfer assets into a trust that is held and managed by a third party. The assets held in the trust are then used to pay out an income stream to the beneficiary or beneficiaries, who are usually family members. After a set period of time, the remaining assets in the trust will then go to the designated charity. The primary benefit of a CRT is that it is a way to transfer assets while retaining some control over how they are used. To set up a trust, you must name a trustee who will manage the assets and make sure the trust follows all legal rules. This trustee can be a family member, a financial advisor, or an attorney. The beneficiary of the trust, who will receive the income stream, has the right to determine how the trust will be structured and what assets will be included in the trust. They also have the right to modify the terms of the trust if certain conditions are met, such as if the beneficiary wants to add or remove beneficiaries or change the payout schedule. In addition to providing a steady stream of income to the beneficiary, another benefit of a CRT is that any remaining assets in the trust at the end of the designated period will be donated to the designated charity. This donation provides the charity with much-needed financial support and also may provide the donor with a tax deduction. For those who wish to transfer assets to their beneficiaries while still maintaining some control over how those assets are used, a charitable remainder trust can be an ideal option.

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

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