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Using a charitable remainder trust in your estate plan

On Behalf of | Jan 24, 2022 | Trusts

If you live in New York and you are preparing an estate plan, you might be interested in giving a portion of your estate to charity. With a charitable remainder trust, you can still provide for beneficiaries and may be able to take advantage of a tax deduction as well.

An irrevocable trust

It is important to understand that a charitable remainder trust is an irrevocable trust. This means that once you place assets in it, it cannot be altered. This is in contrast to a living trust, which you can change or even cancel during your lifetime. With an irrevocable trust, the assets are no longer considered to be your property. This can have advantages, such as protecting them from creditors, but it does mean that you should be certain about your charitable planning wishes before you place assets in this type of trust.

How distributions are made

If you want a trust that includes the option to make additional contributions, you might want to opt for a charitable remainder unitrust. Distributions to beneficiaries from a CRUT are a fixed annual percentage of the assets in the trust. With a charitable remainder annuity trusts, further contributions are not possible, and distributions are made as an annual fixed annuity. You can specify how long you want these distributions to be made to beneficiaries, and at the end of that time period, what remains in the trust goes to the charity.

If you have a complex estate, it can be important to understand the various strategies available to you for dealing with taxes and passing assets to beneficiaries. There may be other ways to donate to charity as well as other uses for trusts. For example, a trust can allow you to specify the timing for when beneficiaries receive their distributions, such as the achievement of specified milestones.

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