The Charitable Remainder Trust

The Charitable Remainder Trust (CRT) is one of the most popular charitable giving techniques available today.

It’s popularity stems from the fact that it allow the Donor to make a Future Gift of property to a qualified Charitable Organization, while retaining the right to an income stream that the property produces during a set period of time.

In addition, because the Charitable Remainder Trust is Irrevocable, the Donor is allowed a current income tax deduction based on the net present-value of the remainder interest (i.e. how much the charity will be getting in the future, discounted back to today’s dollars).

Key Features of the Charitable Remainder Trust

  • A CRT must be Irrevocable
  • The CRT may exist either for a term of years, or for the life (or lives) of one or more permissible persons (usually the Donor and/or his or her direct descendants)
  • During the applicable period, the Donor will either receive a fixed monetary sum (an Annuity Trust), or a sum that is based as a percentage of the assets of the trust (a Unitrust)
  • A Charitable Remainder Annuity Trust (CRAT) may exist for a maximum of twenty (20) years, but a Charitable Remainder Unitrust (CRUT) has no such limit
  • The Unitrust amounts may be paid out in periodic installments, not less frequently than annually
  • At the end of the applicable period, the Remainder Interest transfers to a qualified Charitable Organization
  • At the time of the donation, the Donor is entitled to a current Charitable Deduction equal to the Net present-value of the Future Remainder Interest
  • The minimum annuity or unitrust payout is five (5%) percent of the fair market value of the trust assets, and the maximum annuity or unitrust amount is fifty (50%) percent of the fair market value of the trust assets
  • The law requires that the present-value of the Remainder Interest be no less than ten (10%) percent of the fair market value of the trust assets, as determined on the date the assets are transferred to the trust

These are only the most basic features and regulations that pertain to the Charitable Remainder Trust.

We welcome the opportunity to speak with you in person regarding whether or not such charitable giving techniques would be of value to you and your family.

We emphasize that the entire Charitable Remainder Trust area is extremely complicated, and is dependent on complex Internal Revenue Service rules and regulations, as well as actuarial calculations and valuations.

Therefore, you should not seriously consider this area without first consulting competent legal counsel.