These are often created by Will but may also be established during life. Since a CRT is not a taxable entity, appreciated assets may be contributed to it and then sold free of income tax. This permits diversification of investments without tax. The donor receives an income tax deduction for the value of the charity's remainder interest. This amount is also deductible for gift and estate tax purposes.
Charitable trusts are subject to complex rules affecting income tax, gift tax and estate tax.
Herbert B. Fixler is a partner in Hall Dickler's Estate Planning and Administration Department.