What Are the Tax Benefits of Charitable Trusts?
Americans give freely to support the causes they value, from churches, education, and the arts to medical research. Fortunately, current tax laws encourage and even reward philanthropy. Beyond the basic tax deductions for charitable giving, setting up one or both of the following types of trusts could provide financial advantages in addition to the personal satisfaction that comes from giving. Charitable Remainder Trust When money, securities, property, or other assets are placed in a properly structured charitable remainder trust , the grantor or the grantor's beneficiaries receive payment of a specified amount at least annually. When the trust expires, the designated charity receives the assets that remain. For the grantor, there are a few potential tax benefits: (1) Assets placed in the trust may qualify for an income tax deduction on the estimated present value of the remainder interest that will eventually go to charity. (2) At death, trust assets are not subject to estate tax...