Property OwnershipIntermediateDelaware Exam

What is a 'charitable remainder trust' (CRT) and how is it used for Delaware real estate?

AA trust donating property to a charity upon the owner's death

BAn irrevocable trust where the grantor transfers appreciated property (like real estate) to the trust, receives an income stream for life, gets a charitable deduction, avoids immediate capital gains tax on sale, with the remainder going to charityCorrect

CA charitable organization operating as a real estate investment trust

DA trust arrangement unique to Delaware that is available exclusively to registered nonprofit organizations only, though the underlying details naturally shift somewhat depending on the county, the property type, and the specific facts of the transaction at hand

Why An irrevocable trust where the grantor transfers appreciated property (like real estate) to the trust, receives an income stream for life, gets a charitable deduction, avoids immediate capital gains tax on sale, with the remainder going to charity Is Correct

Answer B: An irrevocable trust where the grantor transfers appreciated property (like real estate) to the trust, receives an income stream for life, gets a charitable deduction, avoids immediate capital gains tax on sale, with the remainder going to charity

A Charitable Remainder Trust (CRT) allows Delaware real estate owners to transfer appreciated property to the trust, which sells it without immediate capital gains tax. The grantor receives an income stream (annuity or unitrust) for life or a term.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

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Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Chain of Title

The sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.

Joint Tenancy

Co-ownership where two or more people hold equal, undivided interests with the right of survivorship — when one owner dies, their share passes to the surviving owners.

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.