Charitable Remainder Trust

Charitable Remainder Trust

A Charitable Remainder Trust (CRT) is a type of irrevocable trust that allows a donor to make a charitable contribution while retaining income from the trust assets for a specified period or for the donor’s lifetime.

In a CRT, the donor transfers assets into the trust, and the trust pays an annual income to the donor or other beneficiaries for a defined period. After this period ends, the remaining assets are distributed to one or more designated charities. This arrangement provides the donor with a charitable income tax deduction at the time of the donation, reduces estate taxes, and may help avoid capital gains tax on appreciated assets.

For example, if a donor establishes a CRT with a $100,000 asset, they might receive annual payments based on a percentage of the trust’s value for 20 years. After 20 years, the remaining assets in the trust are distributed to the chosen charity.