Charitable Remainder Trusts: What You Need to Know

From Chris Sawin, President & CEO, Outer Banks Community Foundation

You’ve probably heard of charitable remainder trusts (CRTs). Maybe you’ve even worked with one. While they’re not everyday tools, CRTs can be incredibly powerful in the right situation, especially for clients with highly appreciated assets.

So, what’s a CRT?
It’s a standalone trust that pays income to your client (or their spouse, kids, etc.) for life or a set number of years. Whatever’s left at the end goes to a charity—like a fund at OBCF.

What about taxes?
Since the CRT is irrevocable, your client gets an upfront income tax deduction based on the future charitable gift. Plus, CRT assets aren’t included in their estate.

Who’s it for?
Clients with appreciated stock, real estate, or business interests. CRTs let them avoid immediate capital gains and reinvest inside the trust.

CRAT or CRUT?
A CRAT pays a fixed dollar amount each year (no add-on gifts). A CRUT pays a percentage of trust assets, recalculated annually—and your client can add more to it.

What about the new “Legacy IRA”?
Clients 70½+ can transfer up to $54,000 from their IRA to a CRT or CGA. But because of setup costs, a charitable gift annuity (CGA) is usually a better fit at that dollar amount.

Need a second opinion?
Call us anytime. OBCF is here to be your trusted partner when it comes to charitable tools that help your clients make a difference close to home.

Let’s keep building a stronger Outer Banks—together.

For more information or assistance with charitable remainder trusts, visit OBCF.org or contact the staff at 252-423-3003.

About the Outer Banks Community Foundation: The Outer Banks Community Foundation is a 501(c)3 nonprofit organization committed to fostering philanthropy and supporting local causes. Through its charitable funds and grant programs, the Foundation strives to enrich the quality of life for residents of the Outer Banks.