charitable remainder trust

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Related to charitable remainder trust: Charitable Lead Trusts

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substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive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 ?
Due to inconsistencies in the data reported on the Current Distributions Schedule (Part III of Form 5227), all distribution information for charitable remainder trusts is derived from the Accumulations Schedule (Part II).
Charitable remainder trusts are further divided into annuity trusts and unitrusts.
While charitable remainder trusts can potentially be profitable, Estroff and Carovano stated that those who typically donate do so because of a strong interest in philanthropy.
Figure J Noncharitable Distributions, by Charitable Remainder Trust Type, Filing Year 2010 [All figures are estimates based on samples-- money amounts are in thousands of dollars] All charitable remainder trusts Number Percent or amount of total Item (1) (2) Number of returns 110,762 N/A Total noncharitable distributions [1] 4,811,993 100.
Exemption for Proceeds of Annuity Contract Should Not Apply to Exempt a Nonsettlor Donee's Interest in Charitable Remainder Trust Arrangement or in Any Other Third-party Trust Arrangement Providing an Annuity Type Benefit: Based on the legislative history that the exemption for annuities is intended to apply to commercial annuity arrangements that are within the definition of life insurance, the annuity exemption should not apply to a third-party nonsettlors interest in a charitable remainder trust or any other third-party trust that grants a beneficiary an annuity interest in the trust.
The Ruling holds that a Charitable Remainder Trust may pay amounts to a Special Needs Trust for the life of an individual if (1) the individual is "financially disabled" (meaning they're unable to manage their financial affairs), and (2) the CRT and SNT combination conforms to one of the following three formats:
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.
While charitable lead trusts (CLTs) first make a stream of payments to one or more charitable beneficiaries, then leave remaining trust assets to non-charitable beneficiaries, charitable remainder trusts (CRTs) do the opposite.
Most charitable remainder trusts have a payout rate of between 5 percent and 8 percent of the trust's net fair market value, depending upon the ages of the income recipients.
However, unlike a charitable remainder trust, a pooled income fund is not a tax-exempt entity.
Another alternative is to create a Charitable Remainder Trust (CRT) for the residual retirement assets, which will shelter the assets from immediate taxation while providing an income stream for your heirs.

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