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

A charitable remainder trust (CRT) is a financial and estate planning tool used by Virginia residents to benefit both themselves and a charity of their choice. A CRT works by allowing an individual to transfer assets into the trust and receive an immediate charitable tax deduction and then be able to receive a steady stream of income over the remainder of their life (or a set term of years). At the conclusion of the trust term, the remaining assets are thus transferred to the designated charity. CRTs are a great tool for anyone looking to both benefit their favorite charity and reduce their taxable estate at the same time. They can also be used to structure investments in a way that is less sensitive to market volatility and provide a degree of asset protection from creditors. Any individual, corporation, partnership, or other entity that satisfies the requirements of the Internal Revenue Code is eligible to use a CRT. Generally, any type of income-producing asset can be placed in a CRT, such as stocks, bonds, mutual funds, real estate, and other property. A CRT is a great way to support a charity and leave a lasting legacy, all while potentially reducing the tax burden on an estate.

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