This is a tax-exempt trust that is created during the life of the individual. At the death of the individual, there is a distribution of an annuity or unitrust amount to a designated charity beneficiary for a term of years which includes a lifetime. The remaining assets will pass to charity on the trust rumination. If assets that have been appreciated are transferred to a charitable trust and later sold by the trust, the trust will not be liable for capital gains tax. The non-charitable beneficiaries attract a tax contribution based on a portion of the capital gains as they are in receipt of the annual distributions. In this way, capital gains tax is deferred until a later date.

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