What is it?

A CRUT distributes a fixed percentage of the value of its assets to a non-charitable beneficiary for a limited period.

Who does it help?

Individuals that are charitable inclined.

Example: People who have highly appreciated assets or property and would like to receive a fixed annual payment.

Result:

At the end of the CRUT term the remainder interest is paid to a charitable beneficiary.

Transfer Assets to CRUT:

The Client transfers assets (usually appreciating low income-producing assets) to a CRUT providing for a specified distribution, at least annually, to one or more beneficiaries, including at least one non-charitable beneficiary, for life or for a fixed term of years (not to exceed 20 years). The Client designates any “qualified” charity as the remainder beneficiary (and may retain the right to change the charitable remainder beneficiary). The Client is entitled to a Federal income, gift, and/or estate tax deduction for the present value of the charitable beneficiary’s remainder interest. The Client’s income tax deduction will be subject to percentage limitation rules. Generally, a higher income tax deduction will be available if a public charity is the remainder beneficiary than if a private foundation is the remainder beneficiary. The Client’s tax deduction must have a value equal to at least 10% of the assets transferred to the CRUT.

During CRUT Term:

A fixed percentage that is at least 5% but not more than 50% of the CRUT assets, valued annually, must be paid annually, to one or more beneficiaries (who may be the Client, his or her spouse, or one or more third persons). The payout will vary from year to year and the CRUT assets need to be revalued accordingly. In contrast to the CRAT, the client may contribute additional assets to the CRUT after it is established. The Client is not responsible for paying capital gains tax on appreciated property sold by the CRUT.

Upon Expiration of CRUT Term:

The value of the remaining assets passes to the Client’s designated qualified charity free of tax.