What is a charitable remainder trust?
A charitable remainder trust (CRT) is a type of legal instrument used by individuals in California to grant a charitable entity (such as a hospital, school, or charity) the right to an income stream generated by assets in the trust. The assets must be specified in the trust, as well as the terms of the income stream. The donor of the trust designates how the assets should be allocated and who should benefit from them. Once the trust is established and the terms of the trust are in effect, the trust’s assets are managed and distributed according to the trust’s instructions. The charitable organization designated in the trust will receive a stream of income from the trust’s assets, and the donor can receive tax deductions in the year the trust was established. In some cases, the trust may even be able to take advantage of lower capital gains or estate taxes. When a charitable remainder trust expires, the remaining assets are given to the charitable organization designated in the trust. This type of trust is often used by individuals in California to help support a charitable cause while also taking advantage of potential tax benefits.
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