Charitable remainder trusts are powerful tools, but they're also irrevocable. Here's what your options actually are.
“Most clients with CRTs don't understand their full range of secondary planning options; they naturally assume that because their CRT is irrevocable, they're stuck with it for life (or until the end of the trust term).”National Association of Estate Planners & Councils (NAEPC) Journal of Estate and Tax Planning, 2016
Charitable remainder trusts (CRTs) are valuable tax planning tools, offering the ability to defer capital gains, while generating an up-front tax deduction and an income stream for life, or a set term. But CRTs are also highly inflexible assets. They are “irrevocable” by law, meaning the key terms — payout rate, who the income beneficiaries are, and so on — cannot be changed.
Because CRTs are irrevocable and life circumstances change, CRTs tend to fall out of alignment with your needs and goals over time. Typically, a CRT is tied to your lifetime and remains in place for several decades. At its inception, the CRT fits perfectly with your goals and life circumstances, and in most cases, it remains a good fit for many years, even decades. But inevitable life changes, as well as shifting tax and economic environments, can lead to a situation where you no longer benefit from the CRT you have in place. The CRT is no longer a good fit.
Considering this, it's not surprising that the longer a CRT has been in place, the higher the likelihood you'll want to make a change. Those who want or need cash, are concerned about rising tax rates, want to provide for their children or grandchildren, or are looking to simplify their financial affairs are often better served by one of the following CRT Secondary Planning options:
Sterling is the industry leader in CRT Secondary Planning services. Since 2003, we have reviewed thousands of CRTs and have successfully arranged over a thousand sale and rollover transactions.
At no cost or obligation to you, and using just four data points, Sterling will review your CRT and provide an analysis showing what the income beneficiary(ies) would receive from selling the income interest to a third party, along with a side-by-side comparison to the value of keeping it. If applicable, we will also illustrate how a rollover would work.
Request a Complimentary Review, and within two business days we will send you our review comparing the options. You can reach our CRT team directly at 703-437-9720 or contact@sterlingtrust.com.
Using just four data points, Sterling can review your CRT and typically send the review within two business days.