Understanding Charitable Remainder Trusts and Tax Benefits

A charitable remainder trust is an irrevocable trust that allows a beneficiary to receive income while alive, with the remainder going to a charitable beneficiary. The beneficiary can receive income ranging from 5% to 50% of the assets placed in the trust, for a set timeframe or lifetime. Setting up the trust can lead to tax deductions based on the present value of the remainder interest, calculated using IRS provided rates. This can be beneficial for individuals looking for lifetime income, avoiding tax impacts, diversifying assets, and mitigating taxes through Roth conversions.