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

A charitable remainder trust (CRT) is a type of estate planning tool often used in Texas to reduce the taxable value of an estate and provide for a charitable donation. It works by transferring assets into a trust, which pays out the income from those assets to the designated beneficiary. The recipient of the income can be an individual or a charitable organization. The trust pays out a certain percentage of the corpus (the sum of the assets in the trust) to the designated recipient for a period of time. At the end of the predetermined period, the remaining assets in the trust are donated to the selected charitable organization. The taxable value of the trust assets is reduced because the trust recipient only receives income from the trust. The gifts made from the trust may also be eligible for a charitable deduction on the donors’ income taxes. CRTs are irrevocable, which means that once the trust is established, the donors can no longer change the terms or beneficiaries of the trust. In Texas, CRTs can be used to help minimize estate tax liability and to provide for a lasting legacy. They can also be used to help fund educational, scientific, or religious causes. Estate planning attorneys in Texas can provide guidance on how to best leverage a charitable remainder trust for the wishes of the donor.

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