What is a charitable remainder trust?

A charitable remainder trust is a type of trust used to provide benefits to the grantor (the person who creates the trust) and also a charitable beneficiary. In Kansas, this type of trust allows the grantor to transfer property to the trust, with the trust then paying a fixed income to the grantor for the duration of the grantor’s lifetime or for a set number of years. The remaining property in the trust is then used to benefit a charitable beneficiary. Charitable remainder trusts are often used as an alternative to a will and allow the grantor to benefit from the property they transfer into the trust during their lifetime while also benefiting a charitable organization. Kansas requires any charity that will receive funds from a charitable remainder trust to be qualified by the Internal Revenue Service as a tax-exempt organization. A qualified appraiser must also be used to determine the value of the property transferred into the trust. Charitable remainder trusts can also be used to reduce the amount of taxes the grantor would have to pay on the property transferred into the trust. The trust itself does not pay taxes, allowing the grantor to benefit from the trust’s income without the additional burden of taxes. It also allows the grantor to avoid any capital gains taxes they might have to pay if they were to simply sell the property. Overall, charitable remainder trusts can provide the grantor with a lifetime of income from the property transferred to the trust, as well as provide a charitable beneficiary with the remaining funds. Charitable remainder trusts can also be beneficial as they can help reduce the amount of taxes the grantor would have to pay on the property transferred into the trust.

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