What is a charitable remainder trust?

A charitable remainder trust (CRT) is a legal arrangement that allows individuals to donate assets to a non-profit organization, while still receiving tax benefits from the donation. The way it works is that the individual transfers assets to the trust, and in exchange for the donation, the individual receives annual payments for life or a set term of years. Any assets or income remaining after the set term of years will be transferred to the non-profit organization. CRTs are a type of estate planning tool that allows individuals to plan for their future retirement and support a charity of their choice at the same time. They provide tax benefits to the donor from the initial transfer of assets and from the proceeds of the trust at the end of the set term of years. Since the donor will receive payments from the trust, they can remain financially secure while still having the satisfaction of knowing they are making a charitable contribution. In Washington, CRTs must be registered with the Washington Secretary of State as a trust and must abide by the Uniform Unincorporated Nonprofit Association Act of Washington. CRTs may also be subject to other state laws, such as charitable trust requirements, so it is important to check with the state before setting up such a trust. It is also important to consult with an estate planning attorney to ensure the trust is properly structured and the charity of choice is eligible to receive the donated assets.

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