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Estate Planning: Understanding Charitable Remainder Trusts

How to Secure a Lifetime Income, Save Taxes & Benefit a Charity


Since 1969, countless families have used charitable remainder trusts (CRTs) to increase their incomes, save taxes and benefit charities.


What does a CRT do?

A CRT lets you convert a highly appreciated asset like stock or real estate into lifetime income. It reduces your

income taxes now and estate taxes when you die. You pay no capital gains tax when the asset is sold. And it lets you help one or more charities that have special meaning to you.


How does a CRT work?

You transfer an appreciated asset into an irrevocable trust. This removes the asset from your estate, so no estate taxes will be due on it when you die. You also receive an immediate charitable income tax deduction.


The trustee then sells the asset at full market value, paying no capital gains tax, and re-invests the proceeds in income-producing assets. For the rest of your life, the trust pays you an income. When you die, the remaining trust assets go to the charity(ies) you have chosen. That’s why it’s called a charitable remainder trust.


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