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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®








 ESTATE PLANNING

  

Are You Ready to Retire?

Retirement Budgeting

Sources of Retirement Income

Tax-Deferred Savings Vehicles

Estate Planning

Selling Your Business

Getting Your Business Ready for Sale

Working With a Business Broker

Closing-Your-Business Sale

More Resources: Retirement Planning 		  Advanced Tip: Charitable Remainder Trusts

A charitable remainder trust offer a great way to gain income from an asset—such as investment real estate—that has appreciated significantly while still avoiding the steep capital gains taxes that you would owe if the asset were sold. Here’s how it works.

1. An individual gives a gift—usually appreciated stock or real estate—to one or more charities.

2. The owner receives an immediate income tax deduction on the appreciated value of the donated asset.

3. The charity generally sells the asset, but because it’s tax exempt, it pays no capital gains taxes.

4. The donor or a designated beneficiary also receives a specified amount of annual income for a set number of years.

5. At the end of that time, the charity owns the assets.

The upside
  • You can name your children or spouse as the beneficiary, thereby transferring income without having to pay capital gains or inheritance tax.
  • You avoid the possibly complex process of selling your assets and paying any related commissions.

The downside
  • Eventually, the asset goes to the charity.

Portions adapted from Tax Adviser, February 2001

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