|Schaffer & Company Wealth Preservation
Charitable Remainder Trusts: Tax Advantages for You
There are important tax advantages associated with charitable remainder trusts. Assets used to fund the trust frequently are sold by the trustee in favor of higher-yielding investments. As the donor, you are not liable for capital gains tax on the sale of these assets since they have been transferred to a trust that is not liable for this tax.
For example: a common practice is to establish a charitable remainder trust with a gift that includes low cost-basis stock with a low current yield. In turn, your trustee sells the stock and uses the proceeds to purchase securities that are more consistent with your portfolio's overall objectives -- thus benefiting both you and the charity you choose.
In addition, you may be able to take a current charitable deduction on your federal income tax return (subject to certain percentage limitations on the amount of charitable deduction that can be taken each year).
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