CRTs in unique planning situations.

• Jurisdiction: United States
• Author: Cox, Barbara
• Date: 01 April 1999

Charitable remainder trusts (CRTs) have long been considered an important option in structuring financial plans for high-net-worth clients. The advantages for the client establishing a CRT include:

1. Tax-deferred growth of the trust assets;

2. Possible asset protection from creditors;

3. Ability to sell highly appreciated trust property at no immediate income tax cost;

4. Ability to diversify investments to reduce risk;

5. Ability to provide an income stream for life to the client or another person, or both;

6. Ability to provide a charitable legacy; and

7. Possible reduction in transfer taxes.

The ability of a charitable remainder unitrust (CRUT) to sell highly appreciated assets without the donor having to recognize gain has been a major factor in the overall appeal of these trusts. A CRUT's ability to reinvest the gross sales proceeds (without depletion...