There is always a temptation to just sell of 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 given them away.
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 don’t have capital gains tax and get payments for years to come. Plus, you get an immediate tax deduction for a portion of the contribution.
A CRT is only one option. Please consult to your tax advisor in which is the best strategy for you.
Wed, Sep 16, 2009
Entrepreneur Midset