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Attorney Randy Ratliff

Charitable Remainder Trusts

Attorney Assisting Nashville Residents With Trust and Estate Matters

If you are considering making an estate plan or altering an existing estate plan, there are several factors that should be taken into consideration. These include the size of your estate, the nature of your assets, the type of beneficiaries for whom you wish to provide (such as beneficiaries with special needs) and your desire, if any, to make charitable gifts during your lifetime or at your death. At the Randy Ratliff Law Offices, PLLC, Nashville estate planning lawyer Randy Ratliff helps help hard-working people in and around Davidson County find the best legal vehicles for their estate planning needs.

Charitable Gifts and Estate Planning

For those who wish to donate a portion of their estate to charity, a charitable remainder trust is one possible option. While a gift to charity can also be made outright during the donor’s lifetime or at death as part of donor’s will, using a charitable remainder trust can be attractive for several reasons. First, there can be positive tax income implications for donor during his or her lifetime. Additionally, there can also be a reduction or avoidance of estate tax when the donor passes away. Finally, the donor may be able to reap some of the benefits of the sale of appreciated property without triggering a capital gains tax (that is, if the charitable beneficiary, who is exempt from capital gains taxation, chooses to liquidate the appreciated asset and use the proceeds to invest in an income-producing asset).

How Charitable Trusts Work

As with other trusts, the basic idea behind a charitable remainder trust is that the trustor places his or her assets into the trust, and the trust becomes a separate legal entity. While trusts can generally be revocable or irrevocable, under federal tax law a charitable remainder trust must be irrevocable. This means that, once the trust is established, the grantor cannot regain legal control of the assets placed in the trust. There are also a few other “catches,” including the fact that a charity must be on the list of charitable organizations approved by the Internal Revenue Service for the establishment of charitable remainder trusts. While most “major” charities are on the list, some smaller, local organizations may not be included.

Once a charitable remainder trust has been set up, the charity becomes the trustee and manages the trust property. Any income that is generated during the grantor’s lifetime (or during a certain time period, depending on how the trust document is drafted) passed to the grantor. Once the grantor passes away, or the time period set forth in the trust document expires, the remaining property left in the trust belongs solely to the charity. While a charitable remainder trust is a useful estate planning tool for some, experienced trust and estates attorneys are familiar with other, less restrictive methods of making a charitable gift for those who find that a charitable remainder trust does not align well with their estate planning strategy.

Estate Planning Lawyer Serving Nashville

If you are considering setting up a charitable remainder trust, you should talk to an attorney who handles wills, estates, and trusts to learn more about this popular estate planning tool. At the Randy Ratliff Law Offices, PLLC, we help those in Davidson and Williamson Counties with a variety of estate planning needs, including charitable remainder trusts, and we will be glad to talk to you about this option, along with alternative methods for making gift-giving part of your overall estate plan. We can also help you with matters such as a living will or durable power of attorney for healthcare, and we can advise you on asset protection planning and business succession planning. To schedule an appointment, call us at 615-656-8282. We serve clients in the cities of Nashville, Goodlettsville, Joelton, Antioch, Hermitage, Madison, Franklin, Brentwood, and Cool Springs. We also handle elder law matters and family law cases, including divorce and asset protection.