What is a charitable remainder trust?

A charitable remainder trust (CRT) is a trust that provides a tax-favored way to donate property to a charitable organization while still securing some financial benefit for the donor. In North Carolina, CRTs are an estate-planning tool that allows an individual to make a charitable donation while reducing their estate taxes and avoiding capital gains taxes. CRTs are funded with assets such as stocks, bonds, or real estate. These assets are placed in an irrevocable trust, meaning the donor cannot withdraw them or change the terms of the trust. The donor can then designate a charitable organization as the beneficiary of the trust, and also name themselves or another individual as the beneficiary of the income generated from the trust assets. The income from the trust is paid out to the beneficiary in yearly installments, and they are able to receive this income tax free. When the trust terminates, after the designated number of years, the remaining assets are transferred to the designated charitable organization. CRTs provide an efficient way for donors to reduce their estate taxes and provide a lasting benefit to a charitable organization. It is important for potential donors to speak to an experienced estate-planning attorney before setting up a CRT to make sure they receive the maximum financial and tax benefits.

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What is a charitable remainder trust?

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