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Attorney Randy Ratliff

Charitable Remainder Annuity Trusts

Knowledgeable Estate Planning Attorney Assisting People in Nashville and Beyond

There are many ways in which a person who wishes to make a gift to a charitable organization may do so. However, some methods may be preferable to others when it comes to issues such as taxation. One possible option for people who wish to engage in planned giving is a charitable remainder annuity trust (sometimes called a “CRAT”). If you are interested in establishing such a trust for your favorite charity, the Randy Ratliff Law Offices, PLLC, can help. Our experienced Nashville estate planning lawyer can also advise you concerning other gifting options, including other types of trusts.

Avoiding probate is a goal of many people these days. There are several reasons for this, including keeping family and financial matters out of court, minimizing taxation, and speeding up the process of providing financial support to beneficiaries. A trust (or a group of trusts) may help accomplish some of these goals. While a last will and testament is still advisable as a “catch-all,” preventing non-trust assets from being subject to the laws of intestate succession and possible taxation, careful planning can help many families avoid the probate process, speed up the passing of assets, and maintain privacy.

How Charitable Remainder Annuity Trusts Work

Trusts are fiduciary relationships in which a trustee holds assets for the benefit of one or more beneficiaries. The person who establishes and funds the trust is called the “trustor.” Depending upon the purpose of a trust, a trust can be testamentary or inter vivos, revocable or irrevocable, and so on. Since most trusts are designed with tax benefits or other financial incentives in mind, it is important that all applicable rules, regulations, and laws be carefully followed when setting up a trust. Failing to strictly comply with, for example, an IRS rule can defeat the purpose of the trust. It is therefore very important that a person who is considering using a CRAT as part of his or her estate plan consult with an attorney who is knowledgeable about not only these matters but also other, perhaps more advisable options. Each person’s estate planning needs are unique and should be considered by a competent professional.

With regard to charitable remainder annuity trusts, the basic concept is that the trustor places a gift of money or other assets into a trust, the trustee then manages the funds for the benefit of the trustor and beneficiaries, the trustor or a designated beneficiary receives a certain amount of income from the trust annually, and the remainder of the trust is transferred to one or more charities upon the trustor’s death. In many instances, a financial advisor, a bank, or a lawyer serves as the trustee of a CRAT. Although it is irrevocable, the trust serves the purpose of providing an income stream to the trustor or a designated beneficiary while ultimately providing a benevolent gift to a particular charity or charities. There are limitations on the number of years in which the trustor or beneficiaries may receive income from the trust. Since a charitable remainder annuity trust can help reduce or eliminate certain taxes, there are also other rules that may apply.

Consult a Nashville Attorney for Guidance on Charitable Giving

If you believe that a charitable remainder annuity trust may suit your estate planning needs, Attorney Randy Ratliff will be glad to help you get started. He can also answer questions that you may have about asset protection or trusts in general, paying attention to your personal situation and goals as he helps you develop an overall estate plan that is suited to your family. We welcome clients from Nashville, Antioch, Hermitage, Madison, Goodlettsville, Joelton, Franklin, Brentwood, Cool Springs, and the surrounding areas. To reach us for an appointment, call 615-656-8282 or contact us online. We will handle your estate planning needs with the utmost sensitivity and discretion.