Charitable Remainder Trusts: Income for Life and a Good Deed at Death

A charitable remainder trust has many benefits:

• At the time you create the trust, you will receive an income tax deduction for charitable giving. Under the Tax Cut and Jobs Act, enacted in December 2017, the standard deduction to $12,000 for individuals and $24,000 for couples. This means that if your charitable contributions along with any other itemized deductions are less than $12,000 a year, the standard deduction will lower your tax bill more than itemizing your deductions. Giving a large sum of money to a charitable remainder trust is a good way to get the deduction.
• Any profit from the sale of investments within the trust are not subject to capital gains tax, which means the trustee may have more freedom in managing the assets.
• When you die, the assets in the trust will pass outside your estate and be eligible for the estate tax charitable deduction.

The downside of a charitable remainder trust is that it is irrevocable, meaning once you create the trust, you can’t cancel it. While you can’t revoke the trust, you may have the ability to change the beneficiary if you decide to give to a different charity. You may also serve as trustee, giving you control over how the trust assets are invested. In addition, note that any income you receive from the trust will be subject to income taxes.

To find out if a charitable remainder trust is right for you, talk to a qualified elder law attorney.