What is a charitable remainder trust?

A charitable remainder trust (CRT) is a type of trust in Texas that allows for an individual (grantor) to donate assets to a trust. These assets are then used to generate income for the grantor, and any remaining assets in the trust are ultimately donated to a charity of the grantor’s choice. CRTs have several benefits for the grantor. All income from the trust is taxed at a lower rate than if the income was received directly from the assets. Additionally, the grantor can receive a charitable income tax deduction upon setting up the trust. The charitable deduction can be taken in the year the trust is funded. In some instances, a CRT can help the grantor avoid capital gains tax on any appreciation of their assets. If the grantor has assets that have risen in value since they were purchased, by transferring them to a CRT, the grantor can avoid paying capital gains tax on the gains. CRTs are a great way to reduce the tax burden and benefit a charity of your choice at the same time. They are a great option for individuals who want to give back to the community in a meaningful way. Additionally, the trust can be set up to last until your death, or for a specific number of years.

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