The Elder and Disability Law Firm, APC
About charitable remainder trusts
California residents can include various types of trusts in their estate plan to ensure that their assets are managed and distributed in accordance with their preferences. One type of trust, a charitable remainder trust, can be used as of source of income for the donor while the remaining assets are donated to the donor's favorite charities. This irrevocable trust provides a form of control and flexibility that makes it useful for estate planning, tax management and retirement purposes.
With a charitable remainder trust, a donor will contribute to the trust and be able to take part in a partial tax deduction based on the trust assets that are intended for the charitable beneficiaries. The donor or another person would be able to receive an income stream from the trust for up to 20 years or during the lifetime of any of the non-charitable beneficiaries. Any number of charities that are named by the donor will receive whatever other donated assets that are left.
There are two primary types of charitable remainder trusts. With a charitable remainder annuity trust, a fixed amount of annuities is distributed annually, and donors are not permitted to make more contributions. With a charitable remainder unitrust, donors will receive a fixed percentage that is based on the trust asset balance, which is re-evaluated every year; they will also have the opportunity to make additional contributions. Any contributions that are made to CRUTS and CRATS cannot be reversed, and it is mandatory that the trusts distribute a percentage of the principal or income to the donor or beneficiary.
An attorney who is knowledgeable about trusts and trusts administration may advise clients about which type of trust may be appropriate for their assets and estate planning goals. The attorney may also assist a client with drafting provisions for the trust.