Q. In a prior article about CRTs, you said the charity must receive 10% of the affected assets. Does that mean the trust might stop paying out income if the beneficiary lives for a long time? J.L.D., Natchitoches, La.
A. Yes. Under the tax rules for charitable remainder trusts (CRTs), the present value of the remainder interest passing to charity must equal at least 10% of the gift’s value on the date of contribution. That amount cannot be distributed to the income beneficiary.
Tip: To qualify for beneficial tax treatment, a CRT must be established for the beneficiary’s lifetime or a period of no more than 20 years.
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