Financial & Estate Planning

One way to reduce estate tax is to create a charitable remainder trust (CRT). The assets you contribute to the trust will be out of your taxable estate with no gift tax obligation.


You might, for example, give appreciated but low-dividend stock to the trust. A CRT can sell the shares and owe no tax, because it’s a charitable trust. Then the sales proceeds can be reinvested in bonds and high-dividend stocks.

If you have a modest charitable intent, you might set up to CRT to pay, say, 7 percent or 8 percent of trust assets each year, as long as you’re alive. If you’re married, the income can continue until both spouses die. This plan will increase your investment income, reduce your taxable estate, and provide an ample income tax deduction because remaining trust assets will go to a charity you’ve named.