Charitable Remainder Trust

There are two main types of CRT: a Charitable Remainder Unitrust (CRUT) and a Charitable Remainder Annuity Trust (CRAT). In both the CRUT and the CRAT, the donor gives the assets to a trust, which distributes the trust income to the donor and the trust principal to the charity at specified times.

• The CRT donor (income beneficiary), who is typically between 55 and 80 years old, gets tax benefits and income for life or a term of years. A CRUT donor gets variable, market-sensitive income that fluctuates with the value of the trust. In contrast, a CRAT donor gets fixed income based on the original value of the assets transferred. The policy may be owned by the heirs or a trust for the benefit of the heirs in order to keep the death benefit out of the taxable estate.
  
• The charity (remainder beneficiary) gets the trust principal when the donor dies.
  
• The donor’s heirs get nothing from the trust when the donor dies.*
  
  
  

*If the donor wants to replace all or part of the inheritance that his or her heirs “lose” to the charity in a CRT, CGA, or PIF, the donor can use part of the income from the trust, annuity, or PIF income to purchase a life insurance policy that names the heirs as beneficiaries.