Posted on August 18, 2011

Yesterday I posted an article entitled 8 Assets to Avoid Placing Into A Charitable Remainder Trust. Today, I want to follow that up with 3 suggestions for assets you can consider using when you create a Charitable Remainder Trust.

Remember, each asset class is unique. You should work with your qualified estate planning attorney when setting up and funding the CRT.

1. Marketable Securities with a Low Basis and High Appreciation Potential

Selling Marketable Securities within the CRT does not trigger immediate taxation for capital gains, and the trust does not pay income tax. Any capital gains on the securities sold is deferred usually until payments are made from the trust.

2. Closely Held C Corporation Stock

The tax treatment for C Corporation stock is the same as for marketable securities discussed above. However, make sure that you comply with the self-dealing rules if you are running the corporation. If the closely held stock is not sold by the trust, it will have to be reappraised each year if you have a Charitable Remainder Unitrust.

3. Appreciated Unencumbered Real Estate

The deferral of capital gains taxes is a major plus. However, since real estate is often illiquid and may be difficult to sell, you can also use it to set up other types of CRT’s like the FLIP-CRUT that don’t start paying the income out of the trust until after the property is sold.