[65강 CRT] CRT를 활용해서 가장 큰 소득세절세효과를 볼 수 있는 후보자 요건 4가지 - YouTube

As the end of the year approaches, most try to reduce the income tax generated that year.

I am especially asked a lot about how to reduce income tax using asset institutions such as CRT and Private Foundation. And there are a lot of cases where we used them.

It’s called Charitable Remainder Trust, CRT, and it’s a program where one sets up a trust and receives dividends from it for a certain period of time,

and then transfers the remaining assets to charity, hence reducing income tax and receiving multiple benefits.

For a detailed explanation of this concept, refer to the video I made in the past.

Today, we're going to take a look at the questions common to those who are interested in CRT, and among the many things I want to share,

especially whether you might be the right candidate to use this trust, and whether this CRT is a system that benefits you enough.

What is CRT?

The reason why you're interested in cutting taxes using this charity trust called CRT is probably because of the limits with reducing income taxes through conventional methods.

For example, if you run a business, there are many ways to pay less income tax by reducing business income.

On the other hand, for salary workers, your ‘glass wallet’ makes sure to keep your income open. So there are also limitations to reducing income tax.

On the other hand, even business owners have limitations to reducing business income, such as reducing taxes through meaningless spending which is illogical,

so there’s no choice but to pay attention to how to reduce income taxes using charity organizations.

With the amount of money transferred to charity, you do receive income deductions, but you don’t spend money outside of it.

It's a good thing because you can maintain your influence on the charity organization. And on the other hand, it's a shame in a way that you give all your assets to charity.

You might think that it would be nice if you could take some of them and use them, and what makes this possible is CRT charity trust.

So, more specifically, if I set up a charity trust on my own and transfer my money to it, of course, the actual process is not simple as I'm explaining now.

But for the sake of discussion, I’m simply moving my money from my left pocket to my right pocket,

and this expenditure isn't leaking out, but I can still get income deductions through this process, so you can reduce taxes.

In addition, I will receive income for a certain period of time such as 10 or 20 years or until my partner and I die. Because I can get it from this trust, it's something that deserves attention.

Who can benefit the most from CRT?

This is today's topic. The most frequently asked question I get is, “Who can benefit the most from this CRT? Let me summarize it into 4 things.

The first is those who are interested in reducing income tax.

And the second is those who currently have highly appreciated property, that is, assets that have increased in value are to be sold soon.

Third, there will be those who are interested in receiving regular and stable cash income until one or their partner dies in the future.

And the last and fourth thing cannot be overlooked. You must have a sense of purpose for charity.

What are the Pros of each options?

So let's take a simple look at these four things. First, reducing yearly income tax. CRT means donating in the future.

You’re not donating to asset institutions right now, but you’re building a trust, transferring assets to this trust, and earning income from this trust during your lifetime.

And after that, the remaining amount is given to charity, so in terms of donation, it's actually an agreement for future donations.

However, despite it being an agreement for the future, it has the advantage of being able to receive a donation deduction this current year.

Therefore, those who are interested in reducing the income tax from future donation agreements probably have a high income and need to be interested in CRT.

And second, regarding the fact that there is an asset with increased value that you plan to sell, this CRT itself is a charity.

It means it’s a duty-free organization. So when selling such assets owned by this CRT, capital gains generated will not be taxed.

for example, if you have a real estate asset that has risen in value, and you want to cash it in and use it as your retirement fund little by little, but if you sell it while you have it, there will be a lot of transfer tax.

You’re probably worried about this. So if you first set up a CRT, move your asset to it and then sell it, no transfer tax will be imposed no matter what the transfer gain is.

In addition, taxes will be incurred little by little only on the amount you receive from the trust every year, so the overall tax benefits will be great.

Therefore, people with these assets will benefit greatly from using CRT

And third, you are interested in securing stable cash flow during your and your partner’s lifetime, and remember I said CRT is a duty-free organization.

Taking advantage of the benefits from this duty-free institution to maximize the return on investment from the assets in here, including the trust of your, your partner, and even your child's lifetime.

Including the trust of your, your partner, and even your child's lifetime. It refers to a person who are interested in receiving stable cash flows.

And fourth, although it may sound too obvious, you should be a person who is interested in and values charity purposes and donation activities.

In other words, for example, if I say I'm not interested in charity at all and I'm only interested in reducing taxes and inheriting certain things, CRT wouldn't be a suitable solution.

Of course for me, it’s a little different. I don't think that leaving my inheritence, legacy for the next generation, necessarily means leaving money and assets behind.

In terms of leaving my trace, I think it's a meaningful inheritance enough for the next generation to continue their influence on a charity, whether big or small.

Of course, there are certain individual differences, so I won't go further into detail,

but anyway, you have to pay attention to charity activities, and these people can benefit from using the CRT system.

In the end, those who meet all four conditions are the very best candidates for CRT. And for those, it's best to proceed with this CRT.

Getting benefits of CRT even in these situations!

But it doesn’t mean that if all four of them don't apply, you mustn't use CRT. It can still be useful.

In other words, one can be the second best, third best candidate.

For example there was a condition to be worried about the transfer tax when trying to sell an asset that has risen a lot in value, but you do not meet this.

In other words, even if you don't have these assets, and just put cash in the trust, CRT can still be more advantageous than not doing it.

Let's take a quick look at the table.

CRT's Usefulness

Taking a look, this is a tool that shows what usefulness CRT has in terms of cash flow.

Let's say there’s a 65-year-old husband and 60-year-old wife.

And Two Life means that the period one receives income in this CRT is until both partners die. In other words, until the person who lives longer dies and the period is assumed to be 30 years.

What's the first assumption we use? Putting in cash yourself.

It doesn’t mean you’re transferring the assets that have risen a lot in value to the trust, but transferring cash as they are.

So when you're putting in $1 million in cash, the basis is also $1 million. If you do that, let’s assume a 10% return in that case.

When you put it in, you're comparing when you use the trust and when you don't, and if you look at the comparison in terms of the cash flow occurring,

it’s also the case that the Current Strategy doesn’t do anything.

In this case, the final cash flow in terms of the cash flow you take comes up to $9.9 million,

which means that if they make this CRT, the cash flow they receive will be $10.7 million. It's about $800,000 more advantageous.

And secondly, as I said earlier here, you’re not putting in cash, and it's a difference of $10.7 million, about $800,000.

In the end, even if you put in cash, you’ll receive a certain amount of benefits through CRT.

And furthermore, if the assets I put in this CRT are not cash assets,

considering the situation of moving and selling assets that have risen a lot, it's a $1 million real estate asset, and the (original) cost is $100,000.

When you put this in, if you compare the difference in value; When one didn't do anything, the couple took $8.1 million over 30 years in terms of cash flow,

while if they did CRT, it would be $10.7 million, which means the cash flow would increase by more than $2 million.

In the end, it shows that the benefits of CRT are that much greater.

In other words, the sale of assets with increased value in trust is the best in terms of enjoying the benefits of CRT, and there are still benefits even if you put cash in.

Don't do CRT in these situtations!

Then there are people who shouldn’t do CRT. They only reduce taxes when they can little by little. and they think they can take out money and use it.

To give an extreme example, there's someone who has $1 million worth of stocks.

After investing $100,000, the value has risen over a long period of time to $1 million, but they’re worried about the transfer tax.

So, for example, I need 200,000 dollar this year, but if I sell 200,000 dollars worth of stocks while I have it, I'll get a transfer tax.

So if I put it in CRT, sell it right after that, and take the money back as a dividend, I can take it without paying any tax. That is a kind of expectation people have. right?

Nonsense. CRT isn't a magic lamp. In this case, income tax deductions will not be possible, taxes will not be reduced, and tax deductible donations won’t be possible.

Conclusion

So far, we've been discussing a lot of questions about CRT, that is, how to evaluate whether you’d be a good candidate for CRT.

Oh, and Finally, if I could mention the additional advantages, this CRT is, to be exact, a CRUT Uni Trust. Once established, you can continue to use it.

For example, you establish a CRT this year, and you can put additional assets into this trust in the next year or 10 years later.

Until when? Until you die. This means that it includes not only you but also your partner, and if you want, your child's lifetime.

In the end, CRT, once established, can continue to be used throughout these lifetimes.

Therefore, in summary, first, you create your own duty-free institution to avoid taxation on your return on investment,

and second, you and your family can increase assets tax-free through this duty-free institution for a very long time.

From this, those who are interested in structuring work that allows their families to receive stable cash flows should actively consider establishing CRT as soon as possible.

This was a brief summary of the information I prepared to evaluate whether CRT is the right solution for you.

It would be helpful if you watched the introduction video of the CRT concept from my earlier videos.

I'll see you next time. Thank you.