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substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive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

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References in periodicals archive ?
With regard to the grantor, the IRS found the CLAT to be a split-interest trust described in Sec.
This mostly reflects earnings from trusts and earnings from mineral assets that were fully released from a split-interest trust in fiscal 2015.
The intermediary that administers a split-interest trust can be either the government itself or a third-party
The Internal Revenue Code (1) contains numerous requirements that an otherwise nondeductible split-interest trust must satisfy in order to be accepted as a qualifying CRT.
A CLAT is an irrevocable split-interest trust with two beneficiaries.
As the name implies, a split-interest trust (SIT) can have both charitable and noncharitable beneficiaries.
It is not unusual for a decedent's will to create a split-interest trust, which bifurcates the decedent's estate to charitable and noncharitable beneficiaries.
A GRAT is a noncharitable split-interest trust in which the grantor retains an annuity interest for a term of years, with the remainder typically passing to noncharitable beneficiaries at the end of the trust term.
However, a split-interest trust may qualify as a QSST.
Income Tax Return for Estates and Trusts; 3 1/2 months on Form 5500, Annual Return/Report of Employee Benefit Plan; and six months on Form 990, Return of Organization Exempt From Income Tax; Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code; Form 5227, Split-Interest Trust Information Return; Form 6069, Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction; Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts; and Form 3520-A, Annual Information Return of a Foreign Trust With a U.S.
A CRT is a split-interest trust, meaning there are two beneficiaries: an individual income beneficiary and a charitable remainder beneficiary.
Form 5227, Split-Interest Trust Information Return, is filed for trusts with both charitable and noncharitable beneficiaries.