Many people enjoy setting up a charitable remainder trust because it will ultimately benefit the charity of their choice. However, the primary reason why most estate planners create a trust like this is for the tax benefits.
There are three primary tax benefits that a charitable remainder trust brings:
A five-year income tax deduction: You will be able to take the money you donated to charity in your trust and use it as a tax deduction that you spread across five years. That being said, you cannot use the entirety of the money you donated as the deduction. You need to subtract the amount you expect to receive as disbursements.
Estate tax deductions: Although most people’s estates will not trigger federal estate taxes, if your estate is large enough, you could benefit from creating a charitable remainder trust as a way of lowering the net amount of your estate below the taxable threshold.
Sidestep capital gains taxes: If you own a property that has risen in value considerably over the years, you might want to consider the use of a charitable remainder trust if you wish to sell this property. When you put a property in your charitable remainder trust, the trust can then sell that property and reinvest the proceeds without incurring capital gains taxes. This can provide a tremendous tax benefit.
Could you and your family benefit from a charitable remainder trust? Our law firm is available to assist you in reviewing the potential benefits of a charitable remainder trust for your family. If you would like to learn more about your legal rights and options in this regard, contact our firm for a no-obligation, first-time consultation.