Charitable Remainder Trusts: How to Give to Charity and Receive Income Too

What if you could support a cause you care about, receive income for the rest of your life, and reduce your estate tax burden — all at the same time? A Charitable Remainder Trust (CRT) is designed to do exactly that.

Here's how it works: You transfer assets — often appreciated stock or real estate — into an irrevocable trust. The trust pays you (and potentially a spouse or other beneficiaries) income for a term of years or for life. When the trust term ends, whatever remains passes to the charities you've designated.

The tax benefits are substantial:

• Charitable deduction. At the time of funding, you receive a partial income tax deduction based on the present value of the charitable remainder — the amount expected to pass to charity.

• Capital gains deferral. The trust can sell appreciated assets without immediately triggering capital gains tax. The gain is recognized gradually as income is distributed to you over the trust term.

• Estate tax reduction. Assets transferred to the CRT are removed from your taxable estate.

  
  

There are two main types: a Charitable Remainder Annuity Trust (CRAT) pays a fixed dollar amount each year. A Charitable Remainder Unitrust (CRUT) pays a fixed percentage of the trust's value, which can increase if the investments perform well.

CRTs work best for people with highly appreciated, low-basis assets — stock in a company they founded, real estate that has appreciated significantly, or a business interest they're selling. The trust converts an illiquid, low-income-producing asset into a steady income stream while creating a lasting charitable legacy.

📌 A Charitable Remainder Trust can be a win for you and a win for the causes you care about. Let's explore whether this strategy belongs in your estate plan.