In charitable remainder trust the corpus of the trust and the income from there is used to provide annuity to one more beneficiaries for a specified number of years or till the lifetime of the beneficiary, as the case may be.
Thereafter either on the death of the beneficiary or on the expiry of the annuity term, the residue of the trust goes to a charity named in the deed of trust.
In case such trust is compliant with the Internal Revenue Service (IRS) Regulations, there are considerable tax benefits. The IRS regulations require that the total annuity payments must be within the range of 5% to 50% of the net asset value of the trust. Moreover, the time gap between two such annuity payments must not be more than one year. The annuity payments cannot be spread over a term of more than 20 years or beyond the life time of the beneficiaries. Further, the trust must not make any outside payments and must transfer remainder interest to the designated charity on the termination of payments.
The grantor of the trust will get charitable income tax deduction for the value of the gift. Moreover, even if the grantor has annuity interests in an irrevocable charitable remainder trust, such property is out of the net of estate tax.
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http://www.law.cornell.edu/uscode/ )
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