|A charitable remainder trust (“CRT”) provides
a way for an individual to make a deferred, or future, gift
to charity. The donor creates a CRT, naming either him/her/themselves
or a third party as Trustee of the trust (Lair Administration
Services, LLC does NOT serve as Trustee), and makes a gift of
assets to the CRT. Upon making such a gift, the donor receives
an immediate, partial income tax deduction based upon the value
of the charitable portion of the gift. See FAQ for how the charitable
deduction is calculated.
The Trustee can then sell the gifted assets inside the CRT
and pay NO capital gains tax on the sale because the trust
is deemed to be tax-exempt under Internal Revenue Code (“IRC”
or the “Code”) Section 664. For this reason, gifts
of highly-appreciated assets often make attractive candidates
for gifting to a CRT.
The CRT pays an income stream to a non-charitable beneficiary
for either a term of years or for the remainder of that beneficiary’s
lifetime (or joint lives in the case of more than one beneficiary).
In many instances, the donor is also the income beneficiary
of the CRT. See FAQ for the method used to determine how income
is taxed to the beneficiary.
At the end of the trust term or upon the death of the last
income beneficiary to die, the assets in the CRT are distributed
to charitable organizations as provided for in the trust instrument.