 |
Loudonville, Ohio |
|
|
A CRT is an especially good tool to use in an estate plan which includes assets that have a low cost basis (ie, they have greatly appreciated in value). If the appreciated asset is sold without the benefit of a trust, there would be unfavorable capital gains tax issues. That is, there would be a tax due, at about a rate of 20%, on the difference in price between what the property sells for minus what the property was acquired at, plus the cost of capital improvements, if applicable. A CRT allows you to transfer the property into a trust and allow the trust, rather than you personally, to sell the trust. Because the assets within the trust are for the benefit of a charity of your choosing, there is no capital gains tax issue. Additionally, you are able to reduce your income taxes by using the charitable deduction. This is usually done by spreading out the deduction over a several year period to maximize the benefit of your deduction. You may be wondering how this charitable gift affects the net value of your estate that will be left to your heirs. The tax savings that result from the charitable donation are used to purchase a life insurance policy to replace the money donated, and, in many cases, results in the settlor (person creating the trust) leaving more to his heirs than would be possible without the use of a trust. A CRT is an irrevocable trust from which you draw income. There are several ways the CRT can be set up, providing for different ways for the income to be dispersed, depending on your individual situation. The advice of an attorney competent in advanced estate planning is necessary to ensure the proper creation and funding of your CRT as well as to help plan ways for you to maximize the benefits of the applicable tax deduction that results from your creation of a CRT. Many people find this to be a wonderful way to benefit their heirs financially while at the same time providing financial assistance to their favorite charity(s). Return to Kick & Gilman home page. |
|
|
||||||||
|
|
||||||||
|
© 2003, Kick & Gilman |
||||||||