There is always a temptation to sell off assets that you’ve accumulated and take the money. However, that usually results in a tax bill. There may be a way to profit more from those assets by giving them away.
By setting up a charitable remainder trust (CRT), you may be able to transform a tax liability into a tax break. You can 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 would owe federal long-term capital gains taxes on the profit and you could owe state taxes as well.
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 then reinvest the entire $350,000 in a portfolio that you administer. In return, you avoid 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 just one option. If you have any assets that have grown in value, please feel free to contact our office to find out the most efficient way to get them out of your estate.