Charitable Remainder Trusts: Utilizing CRATs and CRUTs to Minimize Income and Transfer Tax, SECURE 2.0 QCDs

CRTs have been a long-standing way to simultaneously minimize estate taxes, defer income taxes, provide an annual income stream, and be philanthropic while gaining a charitable income tax deduction. Appreciated assets and company stock are ideal assets to contribute to these trusts. The trust sells the assets allowing the donee to avoid tax on the current-year gain and beneficiaries to postpone recognizing the gain until distributions are made.

As if the historical benefits weren't enough, current rising interest rates increase the IRC Section 7520 rate and the value of the charitable deduction. Additionally, the new provision in SECURE 2.0 allows up to a $50,000 qualified charitable distribution to a charitable remainder annuity trust.

Along with the benefits are caveats. These trusts are irrevocable and can be complex to administer. Using CRATs to eliminate capital gains made the IRS' dirty dozen list of tax scams in 2022. Trust and estate advisers utilizing CRTs need to understand how to avoid missteps and maximize the benefit of these trusts.

Listen as our panel of trust and estate planning experts points out the benefits and caveats of using CRTs to minimize estate and income taxes.

1. Charitable remainder trusts: introduction
2. Benefits
3. SECURE 2.0
4. CRATs
5. CRUTs
6. Calculations
7. Caveats
8. Best practices

The panel will cover these and other critical issues:

• Preparing for IRS scrutiny of CRTs
• Calculating the remainder interest for contributions to a CRT
• Utilizing SECURE 2.0 one-time qualified charitable distribution to a CRAT
• Differences between CRATs and CRUTs
• Clients who could benefit most from CRTs

Learning Objectives

After completing this course, you will be able to:

• Recognize taxpayers who would benefit the most by establishing CRTs
• Determine how the annual payout for CRTs is determined
• Identify SECURE 2.0 requirements for the one-time transfer to a CRAT
• Ascertain key differences between CRATs and CRUTs

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).