Setting the stage. Charitable remainder trusts give donors the satisfaction of making important charitable gifts, income for life (or a term of years) and significant tax benefits – income, gift and estate tax charitable deductions. Sometimes the marital deduction is also in play.
Marital deduction – couples only. Gift and estate tax marital deductions are not allowable if charitable remainder unitrusts and annuity trusts make payments to beneficiaries other than spouses. Thus, a CRUT that pays wife for life, then husband, then son and daughter, with remainder to charity, does not qualify for the gift and estate tax marital deductions. The estate tax issue came up in a recent letter ruling.
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