charitable remainder trust

(redirected from Split Interest Trust)
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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substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive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.

References in periodicals archive ?
The greater that the income and appreciation generated by the assets transferred into the split interest trust exceeds the applicable federal rate, the more wealth that can be transferred to children and descendants at the termination of the trust.
The Flesher-Koch 2001 Split Interest Trust bought the house from Samuel and Frances Buchanan.
The use of split interest trusts, such as charitable remainder trusts, still can be used to accomplish lifetime income tax and charitable planning objectives.