Have you ever heard of a charitable remainder trust? Do you have questions about how it could be used to help you accomplish your estate planning goals?
The tax deduction for a charitable remainder trust operates similar to a charitable annuity. A charitable remainder trust allows a non-charity as an income beneficiary with the remainder or the principle of the amount going to the charity when the income interest terminates. The individual who creates a trust, frequently referred to as the grantor, will become the income beneficiary. A spouse may also be named as a survivor or joint income beneficiary.
There will be no taxes for the gifts to the spouse as a result of the marital deduction. However, if anyone outside of the spouse is an income beneficiary then there is a gift being made for tax purposes except for the annual exclusion.
There are two primary types of remainder trust – unitrust and annuity trust. The unitrust can be structured more flexibly than an annuity trust due to later contributions and the fact that contributions of appreciating assets will increase the income available.
In the event of an annuity trust, then what is required is for the payment for a set percentage of the initial value of the assets to the non-charitable beneficiary. The unitrust, however, must pay a set percentage of the trust assets valued annually.
To learn more about trusts, consult with a California estate planning lawyer.
