The next step is to make a donation to the trust.
This donation can be in the form of cash, stocks, mutual funds, real estate, private business interests and certain other assets. Once you make the donation, you will receive a partial tax deduction for the gift and the assets will be sold by the trustee, who will then reinvest the proceeds. Capital gains tax will not be due at the time assets are liquidated, which allows more money to be put to work to generate income for the income beneficiaries.
Then, depending on how you set up the trust, you or your beneficiaries can receive income from the CRT. This income can be paid monthly, quarterly, semi-annually or annually. The IRS requires the annual payout to be at least 5%, but no more than 50%, of the trust’s assets.
You can set the trust up so that it terminates after a timeframe of your choosing or upon your death. Once the trust terminates, all the remaining assets are then distributed to the charities you’ve designated as beneficiaries. These must be qualified public or private charities as determined by IRS rules.