Charitable Remainder Trusts
14. Trust Income Options
Who can receive this income? There is some flexibility here. It can be paid to you for your lifetime or, if you are married like Max and Jane, the income can be paid for as long as either of you lives.
The income can also be paid to your children for their lifetimes, or to any person or entity you wish, providing the trust meets certain requirements.* In addition, there are gift and estate tax considerations if someone other than you or your spouse receives the income.
Instead of lasting for someone's lifetime, the trust can also exist for a set number of years - up to 20. And, income from the trust is generally taxable in the year it is required to be paid.
By the way, you don't have to take the income now. You can set up the trust and enjoy the income tax deduction now, but postpone taking an income until later. By then, the trust assets, with good management, will have appreciated considerably in value, resulting in more income for you.
*NOTE: The charitable income tax deduction computed at the time of the gift must be at least 10% of the value transferred.