Three Types of Tax Benefits From Charitable Remainder Trusts in Your Estate Plan

Choosing to incorporate charitable giving into your estate plan is an admirable decision. A nice advantage for those who opt to go this route are the many tax breaks that come from some forms of charitable giving. A popular way to make substantial gifts to charity is by creating a charitable remainder trust. The following is an overview of the tax benefits of this type of trust.

Tax Breaks Associated With Your Charitable Trust

What types of advantages can you expect if you decide to incorporate a charitable remainder trust into your estate planning?

Income Tax

The value of your gift to the charity can be deducted from your income tax over the course of five years. It is important, however, to seek guidance from experienced attorneys and tax professionals when it comes to determining the value of your gift. This is because the value is not always straightforward.

Estate Tax

When the property in the trust eventually goes to the charity outright, it is no longer included in your estate. This means that it will not be subject to federal estate tax at your passing.

Capital Gains Tax

Charities, unlike individuals, do not have to pay capital gains tax. If your chosen charity sells the property in the trust, the charity will not be subject to capital gains tax. As a result, it is possible for you to transfer property that appreciates over time to the trust, and when the charity sells it, avoid capital gains tax on the profit. This profit can then be used as the income payments you are entitled to.

Creating a charitable remainder trust is highly technical and requires the guidance of an experienced professional. We have successfully created these trusts for many clients in the past. We encourage you to read about their experiences on our client testimonials page today.

 

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm
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