Tax Law Changes Make CRUTs and CRATs More Attractive Than Ever

8:16 pm California Trusts

trust pic e1378498532909 Tax Law Changes Make CRUTs and CRATs More Attractive Than EverThis week’s Forbes magazine has an interesting article about how the latest tax law changes have made two charitable remainder trusts – the charitable remainder unitrust (CRUT) and the charitable remainder annuity trust (CRAT) — more attractive than ever for higher income households.

These types of trusts allow you to put a highly appreciated asset – real estate, a block of stock, a valuable collection – into the trust and produce retirement income by having the trust sell the asset (the trust, as a tax-exempt entity, will not pay capital gains tax).

Once the trust sells the asset, it pays you either a fixed percentage of the principal (which is revalued every year) if you have a CRUT, or an annual annuity whose amount is set at the creation of the trust if you choose a CRAT.

Payments can continue for the life of the grantor and his or her spouse; after that, what remains goes to charity.  One proviso:  the IRS requires that the charity you choose receive at least 10% of the initial value.  You also receive a current charitable tax deduction for that remainder amount.

There are other variations on charitable remainder trusts that may make sense for you.  Contact our Orange County law firm for more information.

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