In the field of estate planning there are a lot of acronyms tossed about that can be kind of confusing to the uninitiated. We like to highlight one of these from time to time in an effort to demystify things, and with that in mind we will take a look at the CRUT.
In an estate planning context the acronym CRUT stands for a charitable remainder unitrust. These vehicles are utilized to provide individuals with tax efficiency while satisfying their philanthropic urges in the process.
With these vehicles you fund the trust and you name a beneficiary who will receive annuity payments from the trust on an annual basis at minimum. These payments must equal between 5% and 10% of the value of the trust. When you are creating the trust you set a term during which you will be receiving these payments, and this can be for the rest of your life if this is what you choose.
Most people are going to act as their own Trustee, but you must also select a charitable beneficiary. This charity will assume ownership of the remainder that is left in the trust after its term expires. This remainder must equal at least 10% of the contributions into the trust.
When you create the trust you are shifting assets out of your estate and reducing your estate tax exposure in the process. You also may take a charitable deduction that is based on the IRS rules surrounding charitable remainder unitrusts.
To learn more about CRUTs and other tools that are utilized to deliver estate tax efficiency simply take a moment to set up an appointment to sit down and discuss things with a good Indianapolis estate planning attorney.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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