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Using a Charitable Remainder Trust to save taxes and generate income

Chris Nolt
Nolt is the author of the book; Financial Strategies for Selling a Farm or Ranch and the owner of Solid Rock Wealth Management, Inc. and Solid Rock Realty Advisors, LLC, sister companies dedicated to working with families around the country who are selling a farm or ranch and transitioning into retirement.
Holt

A Charitable Remainder Trust is a powerful financial tool for people selling appreciated (or depreciated) property. It is especially valuable for farm and ranch owners who are selling highly appreciated land and who desire to create passive income for retirement. In addition to bypassing tax on the sale of land, one is also able to bypass tax on the sale of livestock, crops, machinery and equipment.

Using a CRT to sell appreciated property offers many benefits, including: bypass taxes on the sale; decrease other income taxes with charitable deductions and credits; increase annual income for retirement; reduce or eliminate estate tax and create legacy gifts to favorite charities.

WHAT ABOUT MY KIDS?



A common concern for married couples is replacing the value of assets donated to a CRT, which eventually pass to charity, for their children. A common solution used to address this concern is the purchase of life insurance. Premiums for life insurance can often be paid out of the excess income generated from the CRT. In using this wealth replacement strategy, donors use payments they receive from the CRT each year to pay premiums on a life insurance policy on their lives with their children and/or grandchildren named as beneficiaries. When the parents die, charity receives what is left in the CRT and the children receive the proceeds of the life insurance. If the life insurance is set up correctly in an irrevocable life insurance trust, the life insurance proceeds are received income and estate tax-free.

The services of an appropriate tax or legal professional should be sought when using a CRT. ❖



— Nolt is the author of the book; Financial Strategies for Selling a Farm or Ranch and the owner of Solid Rock Wealth Management, Inc. and Solid Rock Realty Advisors, LLC, sister companies dedicated to working with families around the country who are selling a farm or ranch and transitioning into retirement.


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