A person wanting to benefit a specific charity may make an outright gift to that charity. However, sometimes, a person may feel that some benefit of certain assets should go to a charity and some should go to him or herself or other family members. These arrangements can have favorable tax and favorable economic results.
A charitable remainder annuity trust (CRAT) is a trust from which a sum certain is to be paid, at least annually, to the income beneficiary. The remainder interest goes to a qualified charity.
A charitable remainder unitrust (CRUT) is a trust that specifies that the income beneficiary is to receive payments, at least annually, equal to a fixed percentage of the net fair market value of the trust’s asset as determined each year. The remainder interest goes to a qualified charity.
A charitable lead annuity trust (CLAT) is a trust in which a qualified charity is an income beneficiary of a specific sum paid for a number of years or for the life of the non-charitable beneficiary. At the end of the annuity period, the assets of the trust revert to the trust grantor or his or her estate.
A charitable lead unitrust trust (CLUT) is a trust in which a qualified charity is an income beneficiary of a payment equal to a fixed percentage of the net fair market value of the trust’s assets as determined each year, for a number of years or for the life of the non-charitable beneficiary. At the end of the annuity period, the assets of the trust revert to the trust grantor or his or her estate.
