charitable remainder trust (Charitable Remainder Irrevocable Unitrust)

n. a form of trust in which the donor (trustor or settlor) places substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive regular profits from the trust during the donor's lifetime. The IRS will allow a large deduction in the year the funds or assets are donated to the trust, and the tax savings can be used to buy an insurance policy on the life of the donor which will pay his/her children the proceeds upon the donor's death. Thus, the donor (trustor) can make the gift to charity, make a return on his/her money and still arrange to make a large gift at death to his/her heirs. The disadvantage is that the assets are permanently tied up or committed.

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In the past, taxpayers have asserted the following actions as within the meaning of commencing a "judicial proceeding" under section 2055(e)(3)(C)(iii), but these efforts were in vain: 1) filing a probate form indicating that a charitable remainder trust exists, and 2) attaching an explanation statement on the estate tax return mentioning a charitable remainder trust.

Judicial guidance to trust reformation under IRC section 2055(e)(3)

Generally, donors contribute to existing pooled income funds, thus incurring far lower administrative costs to the grantor than a charitable remainder trust. At the time of donation, the grantor receives income and gift tax deductions equal to the estimated value of the eventual charitable contribution.

Split-Interest trusts, filing year 2007

If you want to make a gift of money or appreciable property to an IRS-recognized charity, while at the same time providing for a child with a disability or other special need, a 1969 change to the tax code allows you to set up a Charitable Remainder Trust and transfer the property to the CRT rather than directly to the charity.

Charitable remainder and special needs trust: combo: an example of a win-win-win situation for parent, child, with a disability and charity

With a charitable remainder trust, the assets provide a stream of income for a family for either the life of the donor or a number of years.

Trusts avoid tax, preserve family assets

For this reason the NIMCRUT is perhaps the most popular type of charitable remainder trust, since it allows for the deferral of income to later years, much like a deferred-income retirement plan, and still allows the trustee to maximize the payout amount.

The crux of CRUTs: charitable remainder unitrusts provide donors giving opportunity, income