Charitable Remainder Trust (Charitable Remainder Irrevocable Unitrust) Legal Meaning and Definition

Here is a simplified definition of the legal term Charitable Remainder Trust (Charitable Remainder Irrevocable Unitrust).

Charitable Remainder Trust (Charitable Remainder Irrevocable Unitrust)

noun

A Charitable Remainder Trust (also known as a Charitable Remainder Irrevocable Unitrust) is a type of permanent fund or trust where an individual transfers assets into a non-revocable trust, meaning it cannot be cancelled or its terms altered. The goal is to reduce taxable income.

The trust assets, which can earn income, are first given to the designated beneficiaries for the donor's lifetime. At the time these assets are transferred to the trust, the donor is eligible for significant tax deductions.

These deductions can be substantial enough that the donor can use them to obtain a life insurance policy. This means, upon the donor's death, their family could receive a considerable sum of money.

After the death of the donor, the assets remaining in the trust are donated to a specified charity. This act permanently benefits charitable causes while also providing financial advantages to the donor and their family.