Estate planning can seem like a matter of moving assets around and creating financial instruments that allow for their transfer after your death, and of course this is a large and important part of the process Some clients with charitable goals for their legacy feel may the need to do something for those less fortunate or a casue that is important to them or their family.
There are a number of different charitable giving vehicles that your estate planning attorney can explain to you and one of these is the charitable remainder unitrust or CRUT. With the CRUT you appoint a trustee and then select a charitable beneficiary. You must also select a non-charitable beneficiary who will receive income distributions from the trust that must equal at least 5% and no more than 50% of the fair market value of the trust each year. In most cases you as the grantor will choose to assume this role. You can be this incoem beneficiary.
At the end of the term of the trust, which can be for the lifetime of the grantor or any period of time in the trust agreement, the charitable beneficiary will must receive the balance of the trust assets which must be at least 10% of the fair market value of the original contribution into the trust.
From a tax perspective you gain a charitable deduction based on IRS rules, and you also reduce the overall value of your estate by the value of the assets that are placed into the trust. So the charitable remainder unitrust is a win for you from a tax perspective, it can provide you with income for life, and in the end it ultimately benefits the charitable organization of your choosing.