Charitable Remainder Trusts Revisited

Jul 11, 2011 9:00 AM, By Douglas Moore

These vehicles keep your clients' assets available for cash flow “just in case” — yet still allow their property to ultimately pass to their favorite charities

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Many charitably inclined clients abstained from making significant outright donations to charity or creating or funding charitable remainder trusts (CRTs) during the recent economic and tax law uncertainty. They still may be reluctant to donate substantial amounts of assets outright, even with the ongoing economic recovery and limited increased clarity in income and transfer-tax laws.¹ Clients may prefer instead to create or fund a CRT to retain the use or availability of their assets for cash flow “just in case” and have the trust property ultimately pass to charity.

While CRTs can be useful for transfer-tax planning, they typically are used primarily by charitably inclined clients who can benefit from income tax-efficient investing and increasing their current or deferred cash flow. These benefits can be especially attractive for those clients who want to sell a substantial appreciated concentrated asset and then diversify their holdings.

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