Charitable Remainder Trusts Do Not Pay Capital Gains TaxIn modern days of estate planning, charitable remainder trust is one of the most efficient tools. That is why the concept is widely appreciated in the fields of stock marketing, real estate, and business forums. One of the main reasons of its popularity is the conceptual clarity and ease of use. Though it is not all blessings, the advantages prominent in charitable remainder trust far outweigh the disadvantages if any. However, you need not be carried away by the over emphasised print or electronic media, advertising the benefits. You must have an objective assessment of the entire issue. It may be interesting to know, how an effective estate planning using the charitable remainder trust could be made. Sometimes you may also think of a personalised charitable giving plan. The plan after all is required to be cost effective and time economic. Taking all into consideration, the biggest question that you face might be the question of what the maximum amount of income is that you can receive, and how much your charitable deductions would would be. The questions seem quite simple, but the answers are not easy to find. The answers depend on a few common factors, such as, the age of the persons who would receive the income, the amount of the gift, the basis of the cost, and the tax on the income. You will find many financial planners that would provide you with all appropriate answers at a cost of $500 or more. However, you can take into account a few basics in this regard. Charities are meant for social welfare and most of them have the objective of helping out the down trodden and vulnerable sectors of the society. Environmentalist, lovers of animals and plants even build up charitable trusts for the benefit of endangered species. But apart from all these social benefit aspects, charities also serve the individual purpose of reducing your tax bills. It was during 1969 that the United States Congress created a new type of trust. This trust helped the charities and non-profit making organisations to generate more revenue for their causes. The charity remainder trust is gradually gaining in popularity over the years. This kind of trust helps people eliminate capital gains, and allows reduction in estate and income taxes. The best part of it is that the scheme that helps the charities. The concept of the CRT or Charitable Remainder Trust can be laid down as follows: 1. You receive income during your life time. 2. Charity receives residual of trust assets after your death. 3. Charitable Remainder Trust is irrevocable. 4. If you are married, you and your spouse are the income beneficiaries. 5. Charities you name are the second set of beneficiaries. Income beneficiaries get a percentage of income for the lifetime from the trust. The Charity beneficiaries receive the principal amount from the trust after the income beneficiaries die. The charitable remainder trust may be irrevocable but you and your spouse are at complete liberty to change the beneficiaries at any time. As trustees, you also maintain full investment control of the assets inside the charitable remainder trust. Charitable Remainder Trusts do not pay any capital gain tax, and are therefore ideal for assets like stocks. |