What is a charitable remainder trust?
A charitable remainder trust (CRT) is a type of trust used in North Dakota, structured to provide income to one or more beneficiaries (typically individuals) while the remaining trust assets are ultimately used to benefit a charitable organization. A CRT can have multiple beneficiaries, and they can be the same or different. The beneficiary(ies) of a CRT will typically receive income payments over a period of years, after which the remaining trust assets will be transferred to the designated charity. In North Dakota, a CRT can be set up either as a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT). The CRAT will typically pay a fixed amount of income each year, whereas the CRUT will pay a variable amount based on the value of the trust assets. In tax terms, the contributions of an individual to a CRT are typically deductible for income tax purposes. This not only serves as a tax benefit for the donor, but also lessens the burden on the charity for additional income they may otherwise have to generate. The charity receives the residual of the trust upon termination of the CRT, and may use the funds to further their mission or invest in other charitable projects. Thus, the CRT can be used as an effective estate planning tool for both individuals and charities.
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