Split Interest Trust Law and Legal Definition

Split Interest trust is an irrevocable trust in which the income is first dispersed to the beneficiaries of the trust for a specified period of time and then the remainder of the trust is donated to a designated charity. The beneficiaries receive the income and the charity receives the principal after a specified period of time. The trust is split into two interests; present interest is with the beneficiary and the remainder is given to charity. A split Interest can be used to avoid or reduce capital gains taxes, increase income, and avoid or reduce federal estate taxes.

Split interest trust is also known as charitable remainder trust.