Charitable Remainder Trusts
by
Gregory Grant
The work that charities do in this country providing help to those who need it costs a lot of money -- money that must come from donations. And there is no shortage of charities to donate to.
For those who may want to make a sizable gift to the charity of their choice, but still earn money from the principle, they may want to look into something called a charitable remainder trust.
"The ideal candidate for a charitable remainder trusts are people who are trying to get some assets out of their estate to avoid estate taxes, are interested in a current tax deduction, and in addition are charitably inclined and would like to leave money to a charity or group of charities upon their death," said Gilda Borenstein of Merrill Lynch.
But why not just choose a charity or organization and write them a check? After all, that donation would be tax-deductible. The answer may be in the benefits provided to the giver.
"If you gift money to charity, you're actually giving away your assets," Borenstein said. "With a charitable remainder trust, you can have a guaranteed income stream for the rest of your life. You can then take that income stream and use it to buy a life insurance policy, so that when you pass away, your heirs are getting tax-free money upon your death."
That's when the charity would have fulfilled its obligation and would then take ownership of the principle from which the giver had been benefiting.
It almost seems too good to be true, but a charitable remainder trust is an excellent way to put your money to use helping those less fortunate, while preserving for yourself an income stream and a tax-free way to provide for your heirs.
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