The Purposeful Charitable Trust or Foundation: Client Memory Loss and Charitable Remainder Trusts

By John A. Warnick

I wonder how many of you have had a similar experience to the one I experienced about 10 years ago. A client called who I really didn’t know very well. Another partner in my fi rm had helped him create a charitable remainder trust (CRT) in connection with a liquidity event at the company he had helped found. He had just left a meeting with his CPAs and was distressed to learn that the CRT had not saved him any taxes that previous year. In fact, now it was generating taxable income. So the client summed up the purpose of his call to me in these words: “Since we have harvested all of the income tax benefi t we are going to get out of that trust, it’s time to dismantle it and move on to something that will be more effective going forward.”