Charitable Remainder Trusts (CRTs)

Charitable Remainder Trusts (CRTs)

A Charitable Remainder Trust (CRT) is a type of irrevocable trust designed to provide income to the trust’s beneficiaries for a specified period, after which the remaining assets are donated to a designated charity.

In a CRT, the donor contributes assets to the trust and retains the right to receive income from the trust for a set term, which can be the lifetime of the beneficiaries or a specified number of years. This income is typically distributed annually and can be a fixed amount or a percentage of the trust’s value. Once the income term ends, the remaining trust assets are transferred to the charity, allowing the donor to achieve both philanthropic goals and potential tax benefits, such as a charitable deduction at the time of the donation.

For example, if a donor establishes a CRT with $1 million in assets, they might receive annual payments of 5% for 20 years. After 20 years, the remaining assets in the trust will go to the chosen charity.