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Chapter 4. Estate Planning > Charitable Remainder Trust

Charitable Remainder Trust

Talk about your win-win situations. A Charitable Remainder Trust is one you set up that generally provides you income for your lifetime; then at your death, whatever is in the trust passes to a charity that you have previously picked. When you set up the trust by contributing assets to it, you will get a charitable deduction that you can use on your income tax return for the year in which you set up the trust. The amount of the deduction is based on the estimated value of the assets expected to pass to the charity at your death. So, by using this kind of a trust, you provide yourself with a source of income, reduce your income taxes and make a charitable donation, all at the same time.

But what if you want to leave money to your children or anyone else at your death? In that case, you take the money that you save on your income taxes by the use of the deduction, set up an Irrevocable Life Insurance Trust and have the trust buy a life insurance policy on your life to replace the money you are giving to the charity. Now it’s a win-win-win situation.


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