Individuals who want to leave money to a charity in their will, but also need to reduce the taxes on their assets, may want to consider a charitable remainder trust, or CRT. A charitable remainder trust is a tax-exempt irrevocable trust that generates income for the creator while reducing the taxable income of individuals and supporting charities. After the trust creator’s death, the remaining assets in the trust go to support one or more of their favorite charities. Many people consider a CRT as a win-win-win situation for the creator, their beneficiaries and their favorite charities! In this video, Illinois estate and probate attorney Mario Godoy explains three key features of a Charitable Remainder Trust.
In this video, we are going to discuss the three key features of a charitable remainder trust.
1. A charitable remainder trust is an irrevocable trust. That means that once it is created, the trust cannot be canceled. However, the creator of the trust can also be the trustee of that charitable remainder trust. This puts the creator in charge of how the assets are invested.
2. The charitable remainder generates income for the creator of the trust in 2 different ways:
1. If the income is based on a percentage of the trust, it is called a “unitrust.”
2. If the income is set as an annual fixed amount, the trust is often called an “annuity” trust.
3. Assets placed in a charitable remainder trust are not part of the creator’s estate and are not subject to estate taxes. Instead, the assets would pass directly to the creator’s chosen charity.
If you have any estate planning questions, please call us for a consult.
One of the most common estate planning mistakes is the failure to include a residuary clause. Creating and updating your estate plan to make sure your assets are distributed according to your wishes is an essential part of your estate plans. By working with an attorney, you could draft a will or trust that fits your goals now and in the future. To find out the best solution for your personal situation, contact one of our lawyers today and schedule an appointment at 630-864-5835.
AREAS WE SERVE: Cook, Dupage, Kane, Lake, and Will counties