Split-Interest Gifts refer to charitable donations in which the donor retains an interest in the asset being gifted, while also transferring a portion of that asset to a charitable organization. These gifts typically involve two components: a present interest, which benefits the charity immediately, and a future interest, which benefits the donor or their beneficiaries for a specified period before the remainder goes to the charity.
Common forms of split-interest gifts include charitable remainder trusts (CRTs) and charitable lead trusts (CLTs). In a CRT, the donor receives income from the trust for a set period, after which the remaining assets are distributed to the charity. In a CLT, the charity receives income from the trust for a set period, with the remaining assets eventually going to the donor’s beneficiaries.
These types of gifts can provide tax benefits to the donor while supporting charitable causes, making them a strategic option in financial and estate planning.
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