There is always a temptation to just sell off assets that you’ve accumulated and take the cash. But that generally results in a tax bill. There may be a way to profit more from those assets by giving them away.
Charitable remainder trust (CRT)
By setting up a charitable remainder trust (CRT), you might be able to transform a tax liability into a tax break, receive a steady source of income for the rest of your life, and leave a gift to your favorite charity.
Let’s say you spent $50,000 years ago on a stock that’s now worth $350,000. You could sell it, but then you’d owe federal long-term capital gains taxes on the profit and you may owe state taxes too.
As an alternative, you could set up a CRT to benefit one or more charities.
You transfer the stock and the tax-exempt trust sell the shares and reinvest the entire $350,000 in a portfolio that you administer. In return, you escape the capital gains tax and get payments for years to come. Plus, you get an immediate tax deduction for a portion of your contribution.
A CRT is only one option.
If you have assets that have grown in value over the years, contact our firm to find out the most tax-efficient way to get them out of your estate.
Ⓒ Copyright 2016