Many people view the charitable remainder trust as an alternative to the 1031 exchange. But what exactly is a charitable remainder trust and how does it work?
What is a Charitable Remainder Trust?
A charitable remainder trust (sometimes referred to as a CRT) is a mechanism of giving the property away but retaining some of the economic benefits and incomes from the investment.
However, the benefit of doing a 1031 exchange is that you get to keep the ownership of the property entirely in your own name and you’re allowed to keep the control over the investment entirely in your own domain.
Eventually, when you die your heirs can inherit that property with a stepped-up basis. So the CRT may be less attractive to folks that are looking to move this wealth to their next-generation heirs and maintain the safety and security of having a steady stream of income while they’re alive. They control the property, they own the property, and eventually they pass the property to their heirs with a stepped-up basis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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