People who have not given the subject of estate planning much thought often assume that they will simply use a last will to transfer assets to their loved ones after they pass away. This is of course one option that is available to you, but there are many different vehicles of asset transfer that can be woven into your comprehensive long-term plan. One of these that some people find to be extremely useful is the charitable remainder unitrust or CRUT.
You fund the trust and name a non-charitable beneficiary who will receive annual annuity payments from the trust equaling between 5% and 50% of its value. Most people will want to name themselves as the beneficiary, and you can also act as the trustee if you would like to control the trust. You name a charitable beneficiary as well, and at the end of the trust term this charity becomes owner of the remainder of the trust; this remainder must be at least 10% of the original fair market value of the trust.
There are tax advantages that go along with the creation of a charitable remainder unitrust. If you contribute appreciated securities your capital gains exposure can be spread out over the term of the trust rather than being due all at once. The creation of the trust removes those assets from your estate for estate tax purposes, and you also gain an income tax charitable deduction, the amount of which is calculated via some rather complex IRS rules.
To learn more about the CRUT and how it may fit into your estate plan, arrange for a consultation with an experienced estate planning attorney.
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