Charitable Remainder Trust (CRT)
A charitable remainder trust provides income to the donor or other beneficiaries for life or a term, with the remainder passing to charity, offering an immediate income tax deduction and avoiding capital gains on contributed assets.
Exam Tip
CRT = income to donor first, REMAINDER to charity. CRAT = fixed annuity. CRUT = variable unitrust. 10% minimum to charity. Avoids capital gains.
What is a Charitable Remainder Trust?
A CRT provides income to non-charitable beneficiaries first, with the remainder going to charity.
Two Types
| Type | Income Payment |
|---|---|
| CRAT | Fixed annuity (min 5% of initial value) |
| CRUT | Unitrust (min 5% of annual value) |
Tax Benefits
| Benefit | Description |
|---|---|
| Income Tax Deduction | Present value of charity's remainder |
| No Capital Gains | On appreciated assets contributed |
| Income Stream | For life or up to 20 years |
Requirements
- 10% minimum remainder to charity
- Annuity/unitrust rate 5%-50%
- Term: life or up to 20 years
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