What is a charitable remainder trust?

This article discusses the purpose of a charitable remainder trust and the benefits that it serves to the general public. It is useful for those who are unaware of charitable trusts. Read on the following article to know more.

Charitable remainder trust

What are they? Charitable trusts are charity trusts that are not tax exempt; all of the unexpired interests which are devoted to one or more charitable purposes, and for which a charitable contribu­tion deduction was allowed under a specific sec­tion of the Internal Revenue Code. A charitable trust is similar to a private fund, unless it meets the characteristics of a public one. In order to qualify as a charity trust, people must prove that they serve a benefit to the public as a whole, and not specifically towards a certain group of people. They also need to prove that they do not intent to make profit. Charitable remainder trust
A charitable remainder trust is a type of charity trust that is tax-exempt. It is an irrevocable trust that is designed to reduce the taxable income of individuals by first dispersing income to the beneficiaries of the trust for a specified period of time. Then, later donating the remainder of the trust to the designated charity of their choice. Therefore, the whole concept of this trust is to reduce the overall taxes paid and to donate the remainder to a chosen charity. Thus, serving a beneficial and good cause to the community. Types of charity remainder trusts There are two different types of charity remainder trusts: Annuity Trust The donor receives a fixed income and he/she cannot make additional contributions to the trust. Unitrust This type is flexible in that the donor can make additional contributions to the trust. The payments to the donor can vary.

Where to find them

Do you need information? In order to establish a charitable trust, you can research all the necessary information on the Internet. They provide guides on how to set up one, and what you need to do to be eligible for one. Always ensure you do your research carefully to ensure that you establish a charity trust in the correct and appropriate way. This ensures that you are in the right place.