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I received a post card from one of my universities (Univ of Oregon) offering a Charitable Remainder Trust. For a 75 year old couple making a donation of $250K, they claim a payout rate of 5% giving $12.5K income per year (taxable as ordinary income) and a tax deduction of $123.127K for the year donation is made, almost half.

For those faced with required minimum distributions after age 70-1/2 when already in a higher income tax bracket, CRTs could be an attractive option. You save half of the taxes and gain steady income.

The fine print says the $12.5K resets each year to 5% of the cash value of the trust on Jan 1. That implies income grows if the trust earns more than 5% on its assets, but in these low interest days the asset can be consumed gradually and your actual income may decline.

Also deduction amount will vary with age, marital status, and interest rates.

In the example, I presume CRT pays for your life or the life of your spouse. On death of the last, trust goes to the charity designated, in this case UofO. Tax deduction is based on actuarial tables estimates of your life expectancy.
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