Finally, the assets in a charitable remainder trust pass without the expense and delay of probate. Finally, for charities like the Vermont Land Trust, remainder trusts provide significant long-term financial support, including the establishment of permanent endowment funds. The major disadvantage is that the donor and heirs do not have access to the trust principal during their remaining lifetimes. The donor and family cannot make any personal use of the trust's property other than to receive income payments. Therefore, before establishing a charitable remainder trust, donors should consider carefully whether they have other capital resources that will be sufficient to meet their future needs.
Land can be an excellent asset to fund a remainder trust.
Because land often appreciates greatly, a sale by the individual owner would trigger a large capital gains tax. When land funds the remainder trust, no capital gains tax is due upon the sale of the land by the trust. Charitable Remainder Trusts often include a clause stating that the trustee will not begin making payments to the income beneficiaries until after the land sells and the proceeds are invested in the trust. If the land has agricultural, wildlife, or open space value, then the donor should place a conservation easement on the land before placing it in the remainder trust. Otherwise, the trustee may be required by law to sell the property for its full development value.