What is a charitable remainder trust?

A charitable remainder trust (CRT) is a type of trust set up in Maryland to provide lifetime income to an individual (or individuals), and then to donate any remaining assets to a designated charity after the trust’s termination. The person or people who are designated as beneficiaries of the trust receive the income either in regular payments or in a lump sum upon termination of the trust. A CRT is a type of irrevocable trust and must be set up with the assistance of a qualified attorney. In Maryland, CRTs must be duly registered with a court or other proper authority in order to be considered valid and enforceable. In order to set up a CRT, the grantor must donate assets to the trust, such as stocks, mutual funds, or real estate. The income from the CRT can provide significant financial benefits to the grantor, including tax deductions on the value of the assets donated to the trust, as well as income from the trust. Additionally, the asset donations are exempt from capital gains tax and estate taxes. Upon termination of the trust, the remaining assets are transferred to the designated charity completely free from taxation. This allows the grantor to ensure that his or her charitable interests are fulfilled after death, while still receiving financial benefits during his or her lifetime.

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