With volatile economic times threatening, flexibility in all aspects of financial affairs, including charitable giving, is more desirable than ever. While there is an increased need for charitable donations, there are also fewer resources among potential donors. One charitable giving vehicle that has grown popular over the past ten years because of its efficiencies is the charitable remainder trust.A CRT can provide a new income stream for the donor and a benefit to charity — a classic win-win situation. CRTs should continue to have viability for present-day donors, especially those who maximize the flexibility that the rules allow. In pushing CRTs to their legal limit, however, taxpayers also must heed restrictions that, if not followed, can result in disastrous tax consequences.
Those who are in need of an income stream and hold highly appreciated assets may find a CRT a good fit. A CRT can provide a guaranteed income stream to the grantor, as well as an upfront charitable income tax deduction that frees up current cash, a way to avoid capital gains tax on appreciated assets, and a solution to paying any estate tax on the property.
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