Charitable Remainder Trust
What Does Charitable Remainder Trust Mean?
A charitable remainder trust (CRT) is a trust in which beneficiaries receive income for a specified period. Once that time expires, the remaining assets of the trust are donated to charity.
Similar to life insurance, CRTs are used to reduce tax burdens. Donors often use the income payments from the trust to fund a permanent life insurance policy, so their heirs end up with assets roughly equal to what eventually goes to charity.
Insuranceopedia Explains Charitable Remainder Trust
One positive feature of charitable remainder trusts is that they enable charities to receive assets that they might not otherwise have access to. Since beneficiaries also benefit from the trust for a designated period, a CRT proves advantageous for all parties involved. If the named income beneficiary dies before the trust term ends, payments may stop or pass to a contingent recipient, which is much the same issue covered in life insurance beneficiary rules.
