First off I will give a short summary of the Capital Gains Elimination Trust (CGET). Then, I will provide some details about how it works and conclude with a case study as an example of how someone might use this.
Summary:
The Capital Gains Elimination Trust is better known as a Charitable Remainder Trust. How this works is one would deposit highly appreciated assets into the CGET. The trust sells the assets and pays no capital gains tax. You then get to withdraw an income each year from the trust. The withdrawal can be earnings and principal.
Donors can be the trustees of the trust and decide how to invest the trusts assets. In addition, they get an income tax deduction for their contribution to the trust that is based on the term of the trust, the size of the contribution, the distribution rate, and the assumed earnings on the trust.
At this point, the assets are now removed from their estate, they have paid no tax on the capital gains, and they have a stream of income. The IRS requires at least 10% of the present value to be projected to go to a charity of your choice.
If someone wanted the money to be left to family, they could use...
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