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The Ugly Side of Charitable Remainder TrustsThe Ugly Side of Charitable Remainder Trusts

IRS cracks down on abusive tax schemes.

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Conrad Teitell, Heather J. Rhoadesand 1 more

September 18, 2023

7 Min Read
Teitell GettyImages-1184142404.jpg

Inter vivos charitable remainder trusts (CRTs) are often advantageous alternatives to bequests to charity. Unlike charitable gifts by will, CRTs can generate life income and income tax charitable deductions. Most estates aren’t subject to tax; for those that are, estate taxes are also saved by lifetime CRTs.

Inter vivos CRTs provide life income to the donor and/or others, favorable taxation of life income payments and reduce or eliminate capital gains taxation on changing appreciated investments.

But there’s an ugly side to CRTs  involving off-the-wall and unethical schemes using charitable remainder annuity trusts (CRATs). The Internal Revenue Service is cracking down on these abusive tax schemes using CRATs to ostensibly avoid federal in...

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About the Authors

Conrad Teitell

President, Taxwise Giving

Conrad Teitell, A.B., LL.B., LL.M., 98.6. Chairman, National Charitable Planning Group, Cummings & Lockwood, Stamford Conn. For information about Conrad Teitell's publications and lectures visit taxwisegiving.com.

Heather J. Rhoades

 

Heather J. Rhoades practices in the areas of estate planning, estate settlement, trust administration and charitable planning.  She is resident in the West Hartford office where she is a Principal in the Private Clients Group.  She is a member of the firm’s charitable planning group.

Heather received her B.A. from the University of Connecticut and her J.D. from the University of Connecticut School of Law.  She now serves as a mentor for UCONN law students in their first year.

Heather is admitted to practice in Connecticut and is a member of the American, Connecticut and Hartford County Bar Associations.  She is also a member of the Executive Committee of the Estates and Probate Section of the Connecticut Bar Association and is co-chair of the continuing legal education subcommittee of this Section.  Heather is a member of the Hartford Foundation for Public Giving Professional Advisory Committee and the UCONN Foundation Planned Giving Professional Advisory Council.  In addition, Heather is a Director of the Estate and Business Planning Council of Hartford and chair of the seminar committee of the Council.

Heather is a frequent speaker on estate and tax planning issues and has authored a number of articles focusing on various estate planning subjects.

Brianna L. Marquis

Associate, Cummings & Lockwood

Brianna L. Marquis is an associate in Cummings & Lockwood's Private Clients Group and is based in the West Hartford office.