[skrebbel]

Thanks! I think I get it, but not fully yet: if you'd deplete the entire trust before dying, you'd have paid the same capital gains tax as you would've if you had not made the trust, correct? Just spread out over many years.

Why do you feel that it is a loophole if you pay the same, just at different times? (except over what you give to charity, but isn't charity untaxed pretty much across the board in the US?)

EDIT: by they way, yours is the first tax related comment that I recall reading that complains about unfair rules that are in your favour. Hats off, I had expected the opposite answer.

[tossmeout]

I came here to ask the same, @tkiley. It seems the main benefits of your CRUT are (a) deferring your capital gains taxes until later and (b) allowing you to make deductions for charitable giving. But ofc those come at a cost, namely that you don't get paid until later (5% yearly), and that you have to give to charity.

Can't anyone just give to charity and get a deduction? And doesn't everyone get taxed later when they're paid later?

[tkiley]

You're right, a lot of the benefit is in deferring taxes to a later date. This deferral is quite valuable when you consider the time value of money and the fact that by spreading out $millions of gains over many decades, I get to put a lot more of the gains in a lower tax bracket, where if it all came in one year, it would basically all be taxed at 20%.

When you combine decades of deferral with the sizeable charitable deduction, it feels like double dipping. If putting equity in the crut only gave me one or the other (deferred taxation or a big deduction) that would seem intuitively fair. But both together? That feels absurd.

[charlesdm]

I'm not US based, but just curious.

What happens to that capital, is it just sitting in a bank account waiting to be dispensed?

Could you invest or loan it to other companies you control at market rate for other purposes?

[toast0]

A is super useful because normally if you sold your stock to diversify, you'd need to pay capital gains then. If you do it in a CRUT, you don't have to pay until later.

You also get an upfront deduction, which could be bigger (or smaller) than what the charity eventually gets.