charitable remainder trust

charitable remainder trust
charitable remainder trust see trust

Merriam-Webster’s Dictionary of Law. . 1996.

charitable remainder trust
A kind of charitable trust in which someone places substantial assets into an irrevocable trust.The trust is set up so that the donor (or other beneficiaries named in the trust) receives trust income for a number of years or for life, after which the assets go to a tax-exempt charity. The IRS allows a large deduction in the year the assets are donated to the trust. The tax savings are sometimes used to buy an insurance policy on the life of the donor payable to children or grandchildren at the donor's death. This way the donor can make the gift to charity, receive income from the trust, and still make a large gift at death to family members. There are several kinds of charitable remainder trusts, including charitable remainder unitrusts and charitable remainder annuity trusts. Compare: charitable lead trust
Category: Wills, Trusts & Estates → Estate Tax
Category: Wills, Trusts & Estates → Living Trusts & Avoiding Probate

Nolo’s Plain-English Law Dictionary. . 2009.

charitable remainder trust
   (Charitable Remainder Irrevocable Unitrust)
n.
   a form of trust in which the donor (trustor or settlor) places substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive regular profits from the trust during the donor's lifetime. The IRS will allow a large deduction in the year the funds or assets are donated to the trust, and the tax savings can be used to buy an insurance policy on the life of the donor which will pay his/her children the proceeds upon the donor's death. Thus, the donor (trustor) can make the gift to charity, receive a return on his/her money and still arrange to make a large gift at death to his/her heirs. The disadvantage is that the assets are permanently tied up or committed.
   See also: trust

Law dictionary. . 2013.

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