What is a charitable remainder trust?
A charitable remainder trust (CRT) is a legal document that allows a person to designate a certain amount of money, property, or assets to be given to a charitable organization upon their death. The designated funds are then held in a trust and managed by the charity, which then distributes the funds to beneficiaries chosen by the trust creator. In Alabama, a CRT must be established by a person aged 18 or older, and must be in writing. The trust document should include the details of the trust, such as who will serve as trustee, what assets will be held in the trust, and how the funds will be distributed. The trust should also specify how the funds will be used by the charity, as well as any tax implications. CRTs can be used to pass on assets to a charitable organization while still providing benefits to the trust creator and their beneficiaries. For example, the trust creator may choose to receive income from the trust until their death, at which point the remaining funds are transferred to the charity. This structure allows the trust creator to provide for their beneficiaries in the near term, while also ensuring that their desired charities will receive their gifts in the long term.
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