4 Reasons to Consider a Charitable Remainder Trust

The Tax Cuts and Jobs Act of 2017 represents the most significant reform in over 30 years, replacing the Tax Act of 1986. For some, the changes are positive: reduced tax rates for personal and business income, as well as the increased standard deduction. But for people that are itemizing their deductions, the former tax savings can easily be washed out by some of the new restrictions. There are negative impacts for those that use the medical and dental expense deduction, the SALT (state and local taxes) deduction and the mortgage interest deduction.

However, there is one part of the itemized deductions that was positively changed: gifts to charity. Maximizing your charitable deductions, especially through a vehicle like a charitable remainder trust, is one way to take advantage of the changes to the tax code. Here are four benefits of using a charitable remainder trust. (For related reading, see: Choosing the Right Charitable Remainder Trust.)

1. Tax Deduction

One of the key advantages of using this charitable strategy is the immediate tax deduction for the gift. You receive the deduction up front, even though the charity doesn’t receive anything until you pass away.

2. Tax Deferral

Another great benefit of using a charitable trust is the ability to sell highly-appreciated assets without realizing the taxable gains right away. That means you can liquidate assets like stocks or real estate that have significant unrealized appreciation, and reinvest into more diversified portfolios without incurring a huge tax liability all at once. That can be a large tax savings compared to selling the assets outright.

3. Control and Income

Many people decide not to participate in charitable giving because they think they must lose control over and give up any enjoyment from the asset during their lifetime. However, a charitable remainder trust solves both these issues since you are still able to make investment decisions and generate income from the trust.

4. Philanthropy

Last, and certainly not least, is the fact that this is a charitable strategy. Although it is undeniable that this strategy can be complicated, it allows you to give to a cause you feel passionate about. Establishing the trust, setting up custodial accounts, administering the trust, managing distributions, and accounting are just a few things that go into a properly structured charitable remainder trust. But you shouldn’t let that discourage you from considering this powerful strategy. After all, some of the best things in life aren’t easy.

Consider using a charitable trust to solve your tax problems and the problems of your favorite cause at the

same time.

© 2020 Kinetic Financial & Insurance Solutions, Inc.

Kinetic Financial & Insurance Solutions, Inc. and Kinetic Investment Management, Inc. are two separate entities. Insurance products and services are offered and sold through individually licensed and appointed agents in all appropriate jurisdictions under Kinetic Financial & Insurance Solutions, Inc. Investment Advisory Services are offered through Kinetic Investment Management, Inc., a registered investment adviser.


Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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