In short
A charitable remainder trust pays an annuity or a fixed percentage of its value to noncharitable beneficiaries, often the donor, for life or a term of years, and then the remainder goes to charity.
Key takeaways
- The donor gets a charitable deduction for the present value of the remainder interest.
- The trust can sell appreciated assets without immediate tax, spreading the gain over the payments.
- The remainder must be worth at least 10% of the initial value, and the payout must be 5% to 50% a year.
Where it's tested
TCP: Estate & Gift Tax Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A client's total estate is well below the $15 million exemption. The client asks whether to gift highly appreciated stock to children now or hold it until death. From a pure tax standpoint, which is generally better and why?