Unlike the unitrust, charitable remainder annuity trusts allow only one contribution . Some people use a portion of this additional income to pay for life insurance owned by a life insurance trust. The proceeds from that insurance pass tax-free to heirs, replacing the value of the assets contributed to the trust. The chart below illustrates how the trust generates these benefits. A diversified portfolio tends to even out returns and lessen volatility, producing more dependable gains and more consistent income.
Many individuals are justifiably concerned about protecting their assets from creditors.
By contributing assets to an appropriately drafted trust, you can receive all of the benefits of a charitable remainder trust and protect your assets from any future claims. A charitable trust can serve as one of the key elements of a successful charitable and estate planning. And a charitable remainder trust often can be tied to testamentary family foundations, which your children or other family beneficiaries can manage for years to come. Tax Benefits One of the prime benefits of a charitable remainder trust is tax savings. Contributions to most foreign charities are not deductible.