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How do I receive payments from a charitable remainder trust?

On Behalf of | Mar 13, 2023 | Trusts |

Charitable remainder trusts are popular in Connecticut because of their reliability and benefits. Aside from reducing capital gains and taxes, they allow you to receive a regular payment based on your initial terms and agreement.

You could receive payments based on the type of charitable remainder trust you set up:

  • Annuity: You get annual payouts with the same dollar amount you initially chose. Investment fluctuations will not affect your payments’ dollar amount.
  • Unitrust: Your payments change based on a set percentage of your asset’s market value. Your payout amount could change after an annual review according to your agreement. It means that your payments might increase or decrease every year.

Both methods have their advantages. Choosing one over the other could depend solely on your preferences.

How to fund it

You could use diverse types of assets to fund your charitable remainder trust, such as:

  • Monetary assets
  • Owned stocks
  • Retirement assets
  • Other types of property
  • Mutual funds or other securities

Once you set it up, it is irrevocable, which means you cannot make changes without approval from your beneficiaries.

What are the benefits?

It is just one of many estate planning tools you could use. Still, a charitable remainder trust offers many benefits that make this trust type popular, including:

  • Tax breaks
  • A steady income for up to 20 years
  • Asset protection from lawsuits

Additionally, it will not get deductions for estate taxes and other estate procedures, such as probate.

Because you donated your assets as indicated in your agreement, you technically do not own them anymore. After the final income payment, your beneficiaries receive the rest of your trust assets.