Practice Quiz

Financial Planner

Category - Estate Planning

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Calvin wants to know the characteristics of a charitable remainder trust. What is true of these trusts?
  1. There must be at least one non-charitable income beneficiary.
  2. There must be at least two non-charitable income beneficiaries.
  3. There must not be any no other entity beyond qualified charities.
  4. None of the above.
Explanation
Answer: A - Charitable remainder trusts must have at least one non-charitable income beneficiary. The donor retains a limited right to enjoy the property while receiving an income tax deduction and reducing federal estate tax. The charitable remainder trust must have an irrevocable remainder interest to be held for or paid to a charity. The grantor has the right to change the charitable remainderman without causing inclusion in the grantor’s estate.
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