A charitable remainder trust (CRT) is a powerful financial instrument designed to provide both personal financial benefits and a lasting legacy of giving. As the donor, you establish an irrevocable trust, and in return, you gain a potential income stream for yourself or other beneficiaries, with the remainder of the assets earmarked for your favorite charity or charities.

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The key to this strategy lies in its ability to generate income while enabling you to pursue your philanthropic aspirations. It’s a tool that not only contributes to charitable causes but also assists in securing your financial well-being. Let’s delve into the core features and advantages of CRTs and how working with SEIA can be your key to a seamless, well-structured philanthropic and financial future.

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Types of Charitable Remainder Trusts

Charitable Remainder Unitrusts (CRUTs): These trusts distribute a fixed percentage of the trust assets, which is revalued annually. The flexibility of CRUTs allows for additional contributions, ensuring a consistent income source and adaptability to your evolving needs.

Preserving Highly Appreciated Assets: For individuals with long-term appreciated assets, CRTs offer an invaluable benefit. By contributing non-income-producing property or other appreciated assets to the trust, you can avoid capital gains taxes upon sale. This preserves the full fair market value of your assets, providing more for both income and charitable beneficiaries.

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Income Tax Deductions: Funding a CRT offers the potential for a partial income tax charitable deduction. This deduction is based on a calculation of the remainder distribution to the charitable beneficiary, reducing your overall tax burden.

Tax-Exempt Investment Income: The CRT’s investment income is entirely exempt from tax. This makes it an attractive option for diversifying your assets and potentially reducing the tax implications of your investments. Consider donating low-basis assets to the trust to eliminate income tax on the sale of those assets while benefiting your named income beneficiary.

Assets Eligible for Donation

A CRT is a versatile tool that can be funded with various types of assets, including:

  • Cash
  • Publicly Traded Securities
  • Certain Types of Closely Held Stock (except S-Corp stock)
  • Real Estate
  • Certain Other Complex Assets

The ability to use a diverse range of assets helps ensure that you can tailor your CRT to your unique financial circumstances and philanthropic goals.

Incorporating CRTs into your estate planning and wealth management strategies can be a game-changer. By working with SEIA, you’ll benefit from their extensive experience in helping clients establish tax and charitable giving strategies within their estate plans. SEIA’s guidance will help empower you to make informed decisions that align with your financial goals and philanthropic aspirations.

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In conclusion, a Charitable Remainder Trust is more than a financial instrument; it’s a gateway to a legacy of giving and financial stability. By embracing the power of CRTs, you can generate income, preserve the value of highly appreciated assets, take advantage of income tax deductions, and achieve asset diversification. Your choice to partner with SEIA helps ensure that your CRT is tailored to your unique needs, unlocking the full potential of this philanthropic and financial strategy.

As affluent individuals, you possess the means to make a significant impact. A Charitable Remainder Trust can be your vehicle to transform your financial prosperity into a legacy of positive change for the world.