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Charitable Remainder Trust

 
 

A “charitable remainder trust” (sometimes referred to as a CRT) is a planned giving technique that allows you to make a future gift to [ABC charity] and be eligible for an up-front income tax deduction, and retain an income stream for life or for a period of years.

To establish a charitable remainder trust, you will work with your attorney to establish a trust agreement and also work with a person or entity who will serve as the trustee of the charitable remainder trust. What’s more, your local community foundation frequently works with donors to establish and serve as trustee of charitable remainder trusts to support [ABC charity]. 

Your tax advisor will help you determine whether you could benefit from establishing a charitable remainder trust. Factors include:

  1. Your plans to leave gifts to charity following your death to meet your charitable goals

  2. Your income requirements while you are living

  3. The types of assets you own and whether there is a particular highly-appreciated asset or assets (such as stock or real estate) that would make an ideal gift to a charitable remainder trust to reduce the capital gains tax exposure

Here’s how it works:

  1. Your charitable remainder trust can name yourself or someone else to receive a potential income stream for a term of years, no more than 20, or for the life of one or more non-charitable beneficiaries (such as you and your spouse)

  2. Your charitable remainder trust will name [ABC charity] to receive the remainder of the donated assets following the term of years or death of the income beneficiary or beneficiaries.

  3. Your charitable remainder trust will establish the terms of the income stream received by the income beneficiary or beneficiaries. 

  4. A “charitable remainder annuity trust” (CRAT) distributes a fixed annuity amount each year. You cannot make additional contributions to a CRAT.

  5. A “charitable remainder unitrust” (CRUTs), on the other hand, distributes a fixed percentage (at least 5%) based on the balance of the trust assets (revalued annually), and you can make additional contributions to the trust during your lifetime.


    At the end of the income beneficiary’s lifetime, or at the end of the term for the income interest, the remaining trust assets are distributed to [ABC charity].