Charitable Remainder Annuity Trusts Flashcards
1
Q
CRAT Value
A
Total value of property minus
– PV of retained interest
2
Q
CRAT Recipient of payment
A
Noncharitable beneficiary (typ. Donor)
3
Q
CRAT payment
A
- >= 5% and <= 50% of initial FMV
- paid at least annually for life or term up to 20 years (similar to fixed annuity)
4
Q
CRAT remainder beneficiary
A
Charity
5
Q
CRAT additional contributions?
A
NO
6
Q
May CRAT hold tax-exempt securities?
A
Yes
7
Q
CRAT remainder beneficiary
A
Charity
8
Q
CRAT purpose
A
- Split interest gift where part of interest is given to charity
- Donor receives a fixed annuity and remainder goes to charity
- Usually created during life
9
Q
CRAT Remainder Interest requirement
A
PV(remainder interest) >= 10% FMV initial
10
Q
CRAT planning opportunity
A
- Good for clients who desire certainty of fixed income
- As IRS interest rates go up, the deductible charitable remainder interest goes up
11
Q
CRAT Gift/Income Tax consequences
A
Income tax: Donor eligible for an immediate charitable contribution deduction, if created during life, subject to limitations on the type of charity and AGI limitations
