CRTs can be extremely useful for a taxpayer who has a large capital gain that pushes income for a tax year up into higher tax brackets and/or subjects the taxpayer to the Net Investment Income Tax (or “NIIT”). Because CRTs are tax-exempt entities, they can sell assets without recognizing gain.  Instead, the gain realized by the trust is taxed to the grantor, but only as the annuity or unitrust payments are received; thus, allowing the gain to be spread out over many years, possibly subjecting it to lower tax brackets.  In this white paper, several examples are provided with a discussion about how this strategy may benefit a client.

This is Tax Planning Idea #5 from “The Top 40 Tax Planning Opportunities for 2025” e-Book.

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