Charitable remainder trusts could provide an efficient means to reduce income tax and estate taxes while supporting your favorite worthwhile causes. That makes charitable remainder trusts some of the most popular in Naperville.

To accomplish your goals, however, it is essential to ensure that a charitable remainder trust in Naperville is properly structured in compliance with state and federal laws. In many cases, a charitable remainder trust works best in conjunction with other estate planning arrangements such as donor-advised funds. An estates and trusts lawyer could devise a charitable remainder trust to further your objectives and comply with requirements regarding taxes and other issues.

Benefits of Charitable Remainder Trusts

People in Naperville who want to help others are often drawn to the idea of a charitable remainder trust. This type of trust is a practical way to support charities and benefit family members at the same time. In addition to the sense of satisfaction from supporting valuable efforts, a charitable remainder trust could offer several tax benefits. Also, because charitable remainder trust is irrevocable, assets transferred to the trust gain protection from creditors.

Income Tax Deduction

Those who establish a charitable remainder trust in Naperville may take an immediate tax deduction from the current income tax liability. The amount of the deduction varies depending on the age of the party establishing the trust and value that person is expected to receive.

Capital Gains Avoidance

A charitable remainder trust could provide a means to bypass capital gains tax on appreciated assets. Once transferred to the trust, assets may be sold without tax liability. These considerable tax savings could allow for diversification for someone with concentrated holdings in a single area.

Estate Tax Issues

Transferring assets to a charitable remainder trust in Naperville removes those assets from the estate. This reduces the amount subject to estate tax and could be enough to keep an estate below the tax threshold.

Operation of a Charitable Remainder Trust

A charitable remainder trust operates similarly to other trusts. The person who creates the trust is known as a grantor or settlor, and the person who manages the assets in a charitable remainder trust in Naperville is the trustee. The grantor may serve as the trustee, allowing the person who creates the trust to continue to control how the assets are managed.

Typically, a charitable remainder trust is structured to provide income to the grantors during their lifetime. The amount paid could be a set amount (annuity), or a fixed percentage of trust assets or income earned by the trust over the course of time (unitrust). After the grantors pass, the remaining assets in the trust are then distributed to the charities they selected.

However, once established, a charitable remainder trust is irrevocable, so it cannot be canceled. Depending on how the trust documents are prepared, it may be possible to change the terms of the trust.

Assistance with a Charitable Remainder Trust in Naperville

Many people in Naperville find that the charitable remainder trust works well with other vehicles including life insurance policies and life insurance trusts. It is important to understand current and future tax implications and IRS required payout rates. It is also important to name a trustee who could be counted on to follow requirements. Many grantors who choose to serve as their own trustees also work with a trusts attorney or other professional who could assist with legal requirements.

Charitable remainder trusts in Naperville are increasingly becoming more common for people at a variety of stages in life. To learn what options would work best in a particular situation, it is wise to consult a knowledgeable estate planning attorney.