The Charitable Remainder Trust is one of the most common tax planning techniques we use with clients here at Ainer & Fraker, LLP.
Let’s look at one of the most compelling benefits of a Charitable Remainder Trust: the Estate Tax credit for amounts passing to Charity.
While it seems obvious at first – assets passing to Charity are exempt from your Estate for Estate Tax purposes – there are some truly outstanding aspects to this benefit which makes Charitable Remainder Trusts so popular.
The Uncertainty around the Federal Estate Tax is one of the most challenging aspects for both clients and their attorneys to deal with.
Rising and falling Estate Tax credits, rising and falling Gift Tax credits, clawback provisions, portability and a myriad of other issues make planning with certainty extremely difficult today.
This is why a Charitable Remainder Trust is such a powerful planning tool – it allows your family to continue to enjoy the current income stream of an asset during your life (or the lives of others) with the certainty that the asset has been totally removed from your Estate for Estate Tax purposes.
Other Estate Tax planning techniques fail to provide the same level of certainty. Some fail to work properly if you live too long, some fail if you die too soon. Some only succeed at removing a portion of the value of the asset from your Estate. And some are under the constant scrutiny and attack of the Internal Revenue Service and Congress.
By contrast, the Charitable Remainder Trust remains an elegant, and relatively straightforward means of “having your cake and eating it too” – i.e. enjoying the use of the asset during your life, yet knowing it will not be taxed at your death.
As always, you should seek the advice of qualified legal counsel to assist you when considering this or other tax planning techniques.
