A lot of people find that they would like to give something to charity when they are making long-term financial plans. There is no substitute for the positive feeling that you get when you are able to assist worthy causes and as they say, giving is its own reward.
However, in many cases you will indeed get an additional reward in the form of tax benefits. There are a number of different estate planning instruments that can allow you to satisfy your philanthropic urges while simultaneously providing you with tax efficiency. One of these is the CRUT or charitable remainder unitrust.
The way that it works is you fund the trust and name both a charitable and a non-charitable beneficiary. The non-charitable beneficiary receives annuity payments at least annually from the trust that must equal between 5% and 50% of its value. Most people who create such a trust will act as the non-charitable beneficiary.
You can set it up so that these annuity payments are made to you for the rest of your life or for a prescribed term. At the end of the term, at least 10% of the contributions into the trust must remain and these resources will become the property of the charitable beneficiary.
When you create the trust you are removing those benefits from your estate for estate tax purposes. You are also entitled to a charitable deduction based on some complex IRS rules. And, if you act as the beneficiary there are no gift tax implications.
To learn more about charitable remainder unitrusts simply take a moment to arrange for a consultation with a good estate planning lawyer.
Ryan, Hicks, Cumpton & Cumpton LLP is a member of the American Academy of Estate Planning Attorneys.