Charitable Remainder Unitrust and Charitable Remainder Annuity Trust
What are they?
Charitable remainder trusts (CRTs) provide for the eventual transfer of property to charity after paying income to one or more non-charitable beneficiaries for life or a fixed number of years.
- A charitable remainder annuity trust (CRAT) makes income payments to the beneficiary in the form of a fixed amount each year.
- A charitable remainder unitrust (CRUT) makes income payments to the beneficiary based on a percentage of the trust assets as valued each year.
Charitable remainder trusts often are appealing to donors with appreciated assets such as real estate or securities producing little or no income. Because a CRT is tax exempt, it can sell the asset without incurring capital gains tax and reinvest it to generate more income. At the death of the beneficiary, assets will be used by the Foundation to create or add to an endowed fund as you instructed.
What are the benefits?
- Charitable income tax deduction in the year the gift is made with a five-year carryover
- Capital gains avoided on gifts of appreciated assets
- Opportunity for increased income
- Reduced estate tax liability
- Asset diversification and professional trust management
- Opportunities to make sizable gifts to charity
How to establish
The Rhode Island Foundation is happy to work with your attorney, who will draft the trust document. Please contact us for a detailed illustration of the tax treatment and benefits. Please note that the person receiving income must be at least 65 years old.
Minimum contribution
The minimum contribution for The Rhode Island Foundation to serve as trustee is $250,000. You may establish a CRT of a lesser amount with another trustee of your choosing and name the Foundation as a residuary beneficiary.
Download a one-page, easy-to-print fact sheet about charitable remainder trusts. |