There are many different acronyms tossed around within the various legal specialties, and estate planning certainly has its fair share of them. Today we would like to look at the CRUT, which is the acronym that is used to represent legal instruments called charitable remainder unitrusts.
A CRUT is an irrevocable trust that provides income to the grantor while ultimately supporting a charitable cause.
The way that it works is you fund the trust and decide on a term during which you will receive annuity payouts. This can be for the rest of your life or for a fixed term that cannot exceed 20 years.
These annuity payments must equal between 5% and 50% of the original value of the trust, and you must take a payment annually or on a more frequent basis.
At the end of the trust term the charity of your choosing will receive the remainder. This remainder must be equal to at least 10% of the original value of the trust.
As the grantor of the trust you are entitled to a charitable deduction when you fund the vehicle. When you place resources into the trust you are removing them from your estate for estate tax purposes.
And, if you were to convey appreciated securities into the trust you could have the trust sell them. As a result, your capital gains responsibility would be spread over the term of the trust.
These trusts are a good solution when certain circumstances exist. If you would like to learn more about them arrange for a consultation with a Hartford estate planning lawyer who has a comprehensive knowledge of advanced estate planning techniques.