Charitable Remainder Trusts (CRT)
Estate Planning Assistance in Denver
A charitable remainder trust (CRT) is a form of irrevocable trust that is used to avoid the capital gains tax on the sale of a major asset, such as an apartment building, ranch, or commercial property. It provides a major tax benefit for the person who creates the trust, known as the donor, as well as an income stream in the form of an annuity. The CRT also enables the donor to make a substantial gift to his or her favorite charity.
The process of creating a CRT is fairly straight forward. The asset is transferred to the CRT which sells and uses the proceeds to purchase an annuity for the donor. Upon the donor's death the balance of the CRT goes to a designated charity. Our Denver estate planning lawyer at the James A. Littlepage Law Offices, can help thoroughly explain this process.
Benefits of Creating a Charitable Remainder Trust
Because the CRT is tax exempt, it does not pay a capital gains tax on the sale, and the donor receives a tax deduction for his charitable contribution. Another benefit of a CRT is that the donor can determine the length of the annuity payout, choosing up to 20 years or until his death.
In addition the Donor may select one of two types of CRTs:
- Charitable Remainder Annuity Trust (CRAT), which pays the donor a fixed dollar amount every year
- Charitable Remainder Unitrust (CRUT), which pays the donor a fixed percentage of the entire value of the trust annually.
A CRT is the perfect estate planning solution for the owner of a highly valued asset who wishes to avoid capital gains tax, increase his or her cash flow, and benefit his or her favorite charity.
As is true of all tax avoidance devices, CRT's are scrutinized by the IRS to insure that they are in compliance with federal laws and IRS regulations. For that reason it is important to obtain the assistance of experienced and competent legal counsel to prepare the documents and to guide you through the CRT process.
Help Drafting a Charitable Remainder Trust
From our office in Denver, the James A. Littlepage Law Offices assists clients throughout Colorado with all types of estate planning matters. To obtain knowledgeable legal assistance in forming a charitable remainder trust that is tailored to fit the needs of your situation, contact our Denver estate planning lawyer today.