A CRT May Help with Retirement Taxes

We discuss the benefits of using a charitable remainder trust to deal with income taxes at retirement

Photo by Jon Tyson on Unsplash

Earlier this week we did a blog post on using a cash balance plan to defer income taxes for farmers who retire.

However, one of the drawbacks of using a cash balance plan is that you typically need to have it in place for at least five years to soak up the deferred grain that you have accumulated.

If you don’t have five years (or more), then you may want to consider utilizing a charitable remainder trust (CRT) to help defer those taxes. A CRT is a trust where you contribute grain or equipment into the trust. In return you will receive income over a certain number of years. It can be a term certain up to 20 years or it can be for your lifetime or you and your spouse.

Since it is a charitable trust, the expectation when you set up the trust is that charity will receive at least 10% in present value (but this not guaranteed).