Charitable remainder trusts can be powerful planning tools, but over time they can drift out of alignment with your goals. Sterling helps income beneficiaries evaluate whether selling, exchanging, or contributing their income interest may create a better fit for today's reality.
Charitable remainder trusts (CRTs) offer the ability to defer capital gains, generate an up-front tax deduction, and create an income stream for life or for a set term. But by law, they are irrevocable, which means the key terms cannot be changed once the trust is in place.
Because life circumstances, tax environments, and financial priorities change over time, many CRTs eventually stop fitting the people they were originally designed to serve.
Since 2003, Sterling has reviewed thousands of CRTs and has successfully arranged over a thousand sale and tax-free exchange transactions.
“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).”NAEPC Journal of Estate and Tax Planning, 2016
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.
An income interest in a CRT is a capital asset that can be bought, sold, or exchanged. A sale can convert future CRT income into a cash payment today.
For beneficiaries who want to reduce taxable income, reshape the income stream, or create benefits for children or other family members, a tax-free exchange to a new CRT with different terms can be an effective alternative.
In some cases, the best fit may be contributing the income interest to charity when the beneficiary's goals have shifted and ongoing CRT income is no longer needed or desired.
Start with a complimentary review. Using just four data points, Sterling can review a CRT and typically send the review within two business days.