At one time, it was thought that these issues could be avoided by transferring an option to purchase debt encumbered property to the charitable remainder trust
. However, the IRS has since ruled that a charitable remainder trust
funded with such an option would not qualify as a valid charitable remainder trust
(2ar) The IRS determined that where income received by a charitable remainder trust
from its ownership of a limited partnership interest constituted rental activity income, such income would be treated as income from a rental activity in the hands of the unitrust beneficiaries.
In the context of this article, an annuity trust can be either a charitable remainder trust
(with a private income beneficiary) or a charitable lead trust (with a charitable income beneficiary).
Charitable remainder trusts
are typically used in conjunction with wealth replacement trusts.
The Special Needs Trust provides that a specific portion of the amount it receives from the Charitable Remainder Trust
will be paid to the income beneficiary (in your case, the individual with special needs) each month.
Question--How can a "last-to-die" policy be used in conjunction with a joint and survivor charitable remainder trust
Under the Tax Relief and Health Care Act of 2006, a charitable remainder trust
is subject to a 100% excise tax in any year in which the trust generates unrelated business income--no matter how little unrelated business income it receives.
A charitable lead annuity trust or unitrust, which is essentially the reverse of the charitable remainder trust
, provides that a fixed annual payment, either in the form of an annuity or a unitrust percentage, is made to one or more qualified charities during the term of the trust.
Most charitable remainder trusts
have a payout rate of between 5 percent and 8 percent of the trust's net fair market value, depending upon the ages of the income recipients.
However, unlike a charitable remainder trust
, a pooled income fund is not a tax-exempt entity.
Another alternative is to create a Charitable Remainder Trust
(CRT) for the residual retirement assets, which will shelter the assets from immediate taxation while providing an income stream for your heirs.
A charitable remainder trust
irrevocably transfers property (cash, real estate or securities) to a church trustee.