Many Nevada residents want to do something to continue to benefit a cause or charity they hold dear, even after they pass away. A charitable remainder trust, or CRT, can be an important part of an estate plan that continues to provide income throughout the donor’s lifetime and can support other beneficiaries before the remainder passes to a charity. By setting up a CRT, people can benefit from their wealth in order to live on the generated income while planning precisely how their funds will go to support the charity of their choice.
All of this means that a CRT can be part of an estate planning vision but also has a role to play in retirement planning and tax management. When a donor sets up a CRT, he or she can contribute to the trust and receive a partial tax deduction. The deduction is based on the eventual passing of the assets in the trust to a charity. However, the irrevocable trust can provide an income stream for up to 20 years to the donor or to his or her designated beneficiaries. After that time, the principal of the trust will be distributed to the chosen charity.
There are two major types of charitable remainder trusts: charitable remainder annuity trusts and charitable remainder unitrusts. The former allow a fixed distribution each year from the annuity and do not allow additional contributions to add to the trust. On the other hand, the latter do allow additional contributions. These trusts distribute a fixed percentage, based on the overall value of the assets in the trust.
When people are thinking about how to support philanthropic interests through an estate plan, this kind of trust could be a beneficial option. An estate planning attorney can advise potential donors about how best to create these trusts to serve their goals.