Charitable Remainder Trust

A charitable remainder trust strategy may be appropriate for those that plan to leave a significant gift to charity. It is most appropriate for seniors who need income for life, and meaningful tax relief now, but who irrevocably want to leave whatever is left in the Trust after they're gone to charity.

Essentially, a Trust is created and the donor (settlor) transfers property to it. On transfer, the donor may incur immediate capital gains tax exposure. However, most often a charitable tax receipt representing the present value of the projected remainder interest is available to defray some or all of this tax or other liabilities.

The donor, normally also the named Trustee, retains the right to control and use the assets of the Trust. The donor, or another named beneficiary, will normally receive net income from the assets. The Trust will be set up to leave the remainder to charity at the time of the death of the income beneficiaries. Normally the beneficiaries might be a husband and wife, with the remainder going to charity at the time of the second death. Alternatively, if the Trust has been set up to provide for the financial care of a dependant (ie a Henson Trust in the case of a disabled dependant) the remainder would go to charity once care for the dependant is no longer required.

While a Charitable Remainder Trust can be complex, there are specific situations when using this approach can be a wise strategy. If you are planning to leave a significant gift to charity, please contact us and we'll evaluate whether the Charitable Remainder Trust strategy works the best for your circumstances.

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