1. What is a Charitable Remainder Trust?

A Charitable Remainder Trust (CRT) is a tax-exempt irrevocable trust that generates income for the donor or other beneficiaries for a specified period, with the remainder going to charity. It provides income tax benefits and can help avoid capital gains taxes.

2. How Does the Calculator Work?

The calculator estimates payouts and tax benefits for a charitable remainder trust based on principal amount, age, interest rate, and trust type.

Key Factors:

• Principal — The initial amount placed in the trust
• Age — Affects the payout period and tax benefits
• Interest Rate — Determines the payout amount
• Trust Type — Annuity trust (fixed payments) or Unitrust (variable payments)

3. Importance of Trust Planning

Details: Proper trust planning can provide income streams, reduce taxable estates, avoid capital gains taxes, and support charitable causes.

4. Using the Calculator

Tips: Enter the principal amount in dollars, your current age, expected interest rate, and select the trust type. All values must be valid (principal > 0, age between 1-120, interest rate > 0).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between annuity trust and unitrust?
A: Annuity trusts pay a fixed dollar amount annually, while unitrusts pay a fixed percentage of the trust's value each year.

Q2: What are the tax benefits of a CRT?
A: You may receive an income tax deduction, avoid capital gains tax on appreciated assets, and reduce estate taxes.

Q3: Who should consider a CRT?
A: Individuals with appreciated assets, those seeking income streams, and people interested in charitable giving.

Q4: Are there minimum payout requirements?
A: Yes, IRS requires minimum annual payouts (typically 5% of trust value).

Q5: Can I change the terms after creating the trust?
A: No, CRTs are irrevocable and terms cannot be changed once established.