Planned Giving

Charitable Remainder Trusts

Charitable remainder trusts (CRT) provide a means of avoiding capital gains taxes and creating a cash flow that is often higher than what was provided by the assets in the past. An attorney can establish a CRT that is then funded by gifting assets to it. The CRT is a tax-exempt entity, so selling appreciated assets such as stocks or property avoids any capital gains tax and enables the full value of the assets to be invested in a managed portfolio of securities.

Wizard of Oz posterThe donors work with the attorney and the charity or charities that will benefit from the trust to establish the income rate and the length of the trust. It can be established for the lifetime of the income beneficiaries or for a term of years or a combination of both. At the time the assets are gifted to the trust, the donors receive a current tax deduction based on the ages of the income beneficiaries as well as the income conditions of the market and the trust.

There are two different types of charitable remainder trusts.

A charitable remainder unitrust (see example) is a popular way to achieve tax benefits as well as a fixed annual percentage on the value of the assets in the trust. The assets are revalued annually and, if the trust value changes, the payment to the beneficiary(ies) changes.

A charitable remainder annuity trust is set up to pay a fixed rate of return based on the initial valuation at the time the property is placed in the trust. The trust assets are never revalued.

Some additional information on charitable remainder trusts is also available. Charitable Remainder Trusts provide a good degree of flexibility that is valuable in charitable gift planning. For example, a variation on remainder trusts can be an effective way to make gifts of real estate.

Please note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in thisPlanned Giving section has been developed for University Concert Series by Future Focus. Please report any problems to section webmaster.

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