Charitable remainder trusts (CRTs) offer tax advantages to help spur philanthropy. Among many variations of these trusts, a common approach is to have a CRT pay lifetime income to you and your spouse. Once both spouses die, what’s left in the trust (the “remainder”) goes to a charity or charities you have named. Tax benefits include:
* Gift and estate tax. Assets transferred to a CRT are out of your taxable estate, and your spouse’s estate, with no gift tax consequences.
* Income tax. You also get a partial tax deduction, depending upon your age and the income stream you select. The older you are and the less income you want (5 percent per year is the minimum), the greater the upfront writeoff.
* Capital gains. If you donate appreciated assets, you can defer the tax on the unrealized gain. Such tax will be paid over a period of years, as you receive income from the CRT.